* Raises FY adj EPS forecast to $2.80-$3.05 from $2.35-$2.60
* First-quarter adj earnings per share $0.60 vs est $0.31
* Defense operating margins better than expected
* Access equipment sales up 15 pct
* Shares soar 17 percent to touch a 3-year high
Jan 25 (Reuters) - Oshkosh Corp raised its full-year earnings outlook after its first-quarter profit handily beat analysts' expectations on higher revenue from access equipment products such as aerial work platforms and boom lifts.
Shares of the company rose 17 percent to a three-year high of $40.40 on Friday.
Oshkosh forecast adjusted earnings from continuing operations of $2.80 to $3.05 per share for the year ending September, and said an improving construction market would drive growth in the access equipment business in 2013.
The company, which makes tactical vehicles for defense, specialty trucks for construction, and emergency vehicles such as ambulances and fire trucks, shrugged off activist investor Carl Icahn's second overture to take control last October.
Icahn abandoned his effort to take control of Oshkosh in December, and has considerably reduced his stake since then. Icahn held a 4.66 percent stake in Oshkosh as of Dec. 13, down from 9.5 percent.
The company reported a profit of $46.2 million, or 51 cents per share, for the first quarter ended Dec. 31. It earned $38.9 million, or 43 cents per share, a year earlier.
Excluding items, earned 60 cents per share.
Total sales fell 6 percent to $1.76 billion.
Access equipment sales rose more than 15 percent, helped by strong volumes in North America, higher prices and improved after-market sales.
The company said the access equipment business, which contributes about 33 percent to total revenue, received its second-biggest number of orders in a quarter since fiscal 2007.
DEFENSE MARGINS SURPRISE
First-quarter sales in the defense business -- Oshkosh's largest -- fell 21 percent. However, the business reported operating margins of 7.5 percent, higher than Street expectations.
"What was surprising was that profitability in the defense business was probably twice what we expected," Longbow Research analyst Eli Lustgarten said.
Oshkosh has reduced its exposure to the defense market, which once contributed nearly 60 percent to sales, following spending cuts by U.S. government.
The company attributed the impressive margin performance to "favorable adjustments on some contracts and warranty", and improved operational efficiency in its defense plants.
Oshkosh announced plans in October to cut 490 defense jobs.
"We are in very good shape through most of fiscal 2014 from a domestic sales outlook standpoint ... but the concerns are still there, they are valid," Chief Executive Charles Szews said on a conference call with analysts.
Shares of the Oshkosh, Wisconsin-based company were up 15 percent at $39.64 in afternoon trade.
Shares of rival Terex Corp were up 10 percent at $31.15 on the New York Stock Exchange.