Shares rose in after-hours trading, after the late-afternoon announcement. Earlier, the stock fell as investors were apparently concerned over slowing prescription trends for some of the company's key drugs.

The Frazer biotechnology company reported 2007 revenue of $1.77 billion, up slightly from $1.76 billion in 2006. The company posted a full-year loss of $191.7 million, or $2.88 a share, compared with a profit of $144.8 million, or $2.08 a share, in 2006.

For the fourth quarter, Cephalon swung to a profit of $44.2 million, or 56 cents a share, from a loss of $4.9 million, or 8 cents a share, a year earlier. Revenue in the quarter was $450 million, down from $484.7 million in the 2006 fourth quarter.

Frank Baldino Jr., Cephalon chairman and chief executive officer, said 2007 was a "strong performance" year. The company launched Amrix, a muscle relaxant; filed three new-drug applications; began three clinical-trial programs; and "delivered greater sales and earnings than expected."

"We believe that 2008 will mark the beginning of a new phase of growth for the company," Baldino said.

Not all analysts are convinced.

In anticipation of the earnings, Morgan Stanley's Michael Rockefeller downgraded Cephalon shares Friday to "underweight" from "equal weight," saying "the challenges facing the company are more significant than the market realizes."

Excluding a previously announced $425 million charge to settle federal and related state Medicaid investigations into its marketing practices and other onetime items, the company said it earned $65.5 million, or 83 cents a share, compared with $73.8 million, or $1 a share, in the year-earlier fourth quarter.

Analysts polled by Thomson Financial were predicting adjusted earnings of 77 cents a share and revenue of $437.6 million for the quarter. For 2007, the average estimates were for adjusted earnings per share of $3.88 and revenue of $1.76 billion.

Cephalon's top drug, Provigil, a sleep-disorder medication, had $852 million in sales in 2007, compared with $727.9 million in 2006. Provigil sales for the quarter were $219.5 million, up from $204.7 million in the year-earlier period.

Cancer pain drug Actiq sales fell to $240 million for the year from $572.1 million in 2006, due to generic competition. Fentora sales were $33.9 million in the latest quarter, compared with $29.3 million in the 2006 fourth quarter.

Cephalon's stock closed down 64 cents, or 1.08 percent, to $58.47 yesterday - a new 52-week low, but rose in after-hours trading.

"We believe investors have more to be disappointed by in 2008 than to gain, and we could see a further 10 percent decline" in the stock, Lazard Capital Markets L.L.C. analyst Megan Murphy wrote in a note to clients Monday.

Cephalon kept 2008 sales guidance of between $1.80 billion and $1.85 billion, and adjusted per-share earnings guidance of $5.10 to $5.20.