UPDATE 1-Thales' shares surge as company expects to beat medium-term targets

* Shares jump, near June 2017 record high level

* Expects to exceed its medium-term targets

* Dividend up 9 pct, EBIT up 14 pct

* Expects to close Gemalto deal in H2 2018 (Adds share price, analyst comment, detail)

By Cyril Altmeyer and Tim Hepher

PARIS, March 6 (Reuters) - France’s Thales said it expected to exceed medium-term targets it set itself four years ago, as higher defence spending offsets slower telecom satellite markets, sending its shares to surge higher.

Europe’s largest defence electronics group said 2017 sales rose by 6.1 percent, or 7.2 percent on an underlying basis, to 15.795 billion euros ($19.50 billion).

Earnings before interest and tax (EBIT), or operating profit, rose 14 percent to 1.543 billion euros for a margin of 9.8 percent, up 0.7 percentage points. Thales also increased its dividend by 9 percent to 1.75 euros.

Analysts were on average expecting annual operating profit of 1.47 billion euros on revenue of 15.595 billion euros, according to Thomson Reuters I/B/E/S estimates.

Thales shares were up 6.4 percent at 95.48 euros in early session trading - close to a record high of 100.45 euros reached in June 2017.

“Defence is a sector that is currently growing, so it’s not surprising to see Thales post these good figures. We are currently looking to see if we can make an entry into the stock,” said Jerome Schupp, fund manager at Geneva-based investment firm Prime Partners.

Thales said its order intake fell 9 percent to 14.92 billion euros in 2017, but was broadly unchanged after stripping out an Indian order for fighter jets in 2016.

For 2018, Thales expects an order intake of around 15.5 billion euros and growth in underlying sales of 4-5 percent.

Operating profit is forecast to come in at 1.62-1.66 billion euros. The forecasts exclude the impact of its planned acquisition of digital security firm Gemalto, which Thales said was on track to close in the second half of 2018.

Thales added it now believed it can exceed a target for average organic sales growth of more than 5 percent in 2016-2018, and said its 2018 operating margin should exceed a forecast of 9.5-10 percent for 2017/18 that it previously set.