UPDATE 1-Babcock again ups EPS forecast, shares rise

(Adds details, fund manager comment, share action)

SYDNEY, Dec 24 (Reuters) - Babcock & Brown Ltd (BNB.AX: Quote, Profile, Research, Stock Buzz), an Australian investment and advisory firm, raised its earnings per share growth (EPS) forecast to at least 45 percent on Monday, boosting its shares as much as 5.5 percent.

Babcock's third profit upgrade this year comes at a time when global investment banks are riddled with billions of dollars of write-downs due to their exposure to the distressed subprime loans.

"They have been announcing a lot of deals over the last couple of months. The market has reacted positively today," said Don Williams, a fund manager with Platypus Asset Management, which oversees about A$1.5 billion ($1.3 billion) including Babcock shares.

"There is still a lot of uncertainity surrounding these businesses because of the issues in the U.S.," he added.

Babcock started the year with a 20 percent EPS growth forecast, raised it to 30 percent in May and then at least 40 percent in August.

The firm also announced the sale of some Portuguese hydro assets on Monday, and said its 2008 growth would be underpinned by a strong pipeline of transactions despite current conditions in the debt markets.

The assets sold had an enterprise value of 178 million euros ($256 million).

Investors have turned cautious towards investment banks such as Babcock & Brown and Macquarie Group Ltd (MQG.AX: Quote, Profile, Research, Stock Buzz) in the aftermath of a global credit crisis.