UPDATE 1-Palomar Q1 profit lags Wall Street; shares drop

(Recasts; adds details, share movement)

May 1 (Reuters) - Aesthetic laser device maker Palomar Medical Technologies Inc (PMTI.O) posted a quarterly profit that trailed market estimates, as product revenue fell in a deteriorating U.S. economy, sending its shares down 11 percent.

The company, which makes laser devices used for cosmetic purposes, posted a 35 percent fall in product revenue to $17.7 million as customers put off purchases due to a slowdown in the economy.

Palomar reported a first-quarter net loss of $1.0 million, or 5 cents a share, on revenue of $23.0 million, compared with a profit of $5.9 million, or 30 cents a share, on revenue of $31.5 million, a year earlier.

Excluding items, Palomar posted a profit of 9 cents a share.

Analysts on average expected earnings of 17 cents a share, excluding special items, on revenue of $28.99 million, according to Reuters Estimates.

Shares of the Burlington, Massachusetts-based company fell to a low of $12.50, before recovering some of the losses to trade down $1.25 at $12.85 Thursday morning on Nasdaq. (Reporting by Suzannah Benjamin in Bangalore; Editing by Pratish Narayanan)