UPDATE 3-Sepracor profit beats; full-year outlook raised

* Q2 EPS ex-items of 72 cents vs 39-cent Street view

* Revenue rises 11 percent

* Shares rise 3.7 percent (Updates share price)

BOSTON, July 24 (Reuters) - Sepracor Inc SEPR.O, which makes the sleep drug Lunesta, posted higher-than-expected second-quarter earnings on Friday and boosted its forecast for the year, sending its shares up 3.7 percent.

Sepracor’s fortunes have improved since it announced in January it would cut some 20 percent of its workforce in a cost-cutting effort that is showing up on its bottom line.

Net income fell to $44.9 million, or 39 cents per share, from $380.9 million, or $3.28 per share, a year earlier, when the company reported a gain from the valuation of deferred tax assets.

Excluding a charge and other items, earnings of 72 cents were ahead of the 39 cents expected by analysts, according to Reuters Estimates.

Revenue rose 11 percent to $326.2 million, above analysts’ expectations of $278.4 million.

As a result of its revenue gains and cost-savings, the company increased its forecast for 2009.

The Marlborough, Massachusetts-based company predicts full-year revenue in a range of $1.225 billion and $1.275 billion, up from a previous forecast of $1.15 billion to $1.25 billion.

It projects earnings excluding one-time items of between $2.55 a share and $2.90 a share. In January it predicted 2009 earnings per share of between $2.10 and $2.70.

Sepracor’s shares rose 3.7 percent to $16.41 on Nasdaq. (Reporting by Lewis Krauskopf and Toni Clarke; Editing by Lisa Von Ahn and Derek Caney)

Reporting by Toni Clarke