UPDATE 2-Allegheny Technologies profit misses, stock drops

* Q2 EPS 36 cents vs Street view 37 cents

* Sales jump 48 percent to $1.05 billion

* Aerospace industry demand improves

* Stock drops over 5 percent (Adds outlook, CEO comments, stock drops)

NEW YORK, July 28 (Reuters) - Metals processor Allegheny Technologies Inc (ATI.N) reported a quarterly profit on Wednesday, but said it did not expect demand to improve until later this year or next and its stock dropped over 5 percent.

Despite turning a profit after a year-ago loss and reporting a sales jump of 48 percent driven by strong demand from the aerospace industry, the company's second-quarter earnings missed Wall Street expectations.

In morning trading on the New York Stock Exchange the stock was down 5.4 percent at $49.20.

Net earnings were $36.4 million, or 36 cents per share, compared with a loss of $13.4 million, or 14 cents per share, in the same quarter of 2009, the Pittsburgh-based company said. Analysts on average were expecting earnings of 37 cents per share, according to Thosmon Reuters I/B/E/S.

Allegheny Techs' sales rose to $1.05 billion from $710 million, beating the analyst estimate of $954 million.

"Our focus remains to execute as well as possible in the third quarter and continue to position ATI for the expected strong growth trends in our key global markets," said Chairman, President and Chief Executive Officer Patrick Hassey.

"Beyond 2010, we expect to recover and grow faster than our key markets as a result of new customers."

He said demand from the aerospace market, particularly for jet engines, continued to improve. Allegheny Techs expected a fourth-quarter rebound in demand for standard stainless products because of restocking in the supply chain and because end-use demand does not appear to be deteriorating.

(Reporting by Steve James, editing by Dave Zimmerman)