UPDATE 2-Genzyme 3rd-quarter earnings beat expectations

(Adds outlook, analyst comment, updates share price)

By Toni Clarke

BOSTON, Oct. 24 (Reuters) - Genzyme Corp GENZ.O reported better-than-expected third-quarter earnings on Wednesday and an optimistic outlook that sent shares of the maker of drugs for rare and chronic diseases up more than 3 percent.

Net profit rose to $159.3 million, or 58 cents a share, from $16 million, or 6 cents a share, a year earlier, when the company took an acquisition-related charge. Revenue rose nearly 19 percent to $960.2 million.

Excluding special items, the company earned 90 cents a share, beating the 86 cents a share average estimate from analysts polled by Reuters Estimates.

In addition, Genzyme laid out a better-than-expected long-term earnings outlook, saying it expects adjusted earnings in 2008 of $4.00 a share and earnings of $7.00 a share in 2011. Analysts had been expecting $3.89 a share in 2008 and just $5.87 a share in 2011.

The numbers follow a more general statement by the company in July that it expected compound annual earnings growth of 20 percent a year for the next five years.

"They threw down the gauntlet three months ago and if there was any doubt that Genzyme was serious, it has got to be erased by this," said Christopher Raymond, an analyst at Robert W. Baird.

The company said sales of Myozyme, a treatment for the muscle disorder Pompe disease, rose to $53.6 million from $20.4 million a year ago.

Sales of Fabrazyme, for the treatment of the genetic disorder Fabry disease, rose 12 percent to $104.6 million while sales of Cerezyme, for Gaucher disease, rose 13 percent to $286.1 million.

Sales of Renegal, the company's kidney disease treatment, rose 14 percent to $154.2 million.

Genzyme said that during the third quarter it generated $280 million in cash from operations, and that it is using a portion of the cash to repurchase shares under a three-year program to reduce the dilutive effect of equity compensation programs.

Since the program began in the second quarter, the company has spent $181.2 million to repurchase 2.8 million shares.

Genzyme's shares were up $2.27, or 3.1 percent, to $75.78 in mid-morning trading on Nasdaq. (Reporting by Toni Clarke)