CHICAGO (Reuters) – Allergan Inc (AGN.N: Quote, Profile, Research) reported on Wednesday its quarterly profit rose on continued strong demand for its Botox anti-wrinkle treatment and other specialty pharmaceuticals and sees continued growth, even if the United States is gripped by a recession.

Its shares initially fell to a two-month low on concerns that demand for its discretionary products would wane in a recession, but rebounded on management assurances about prospects.

"There’s nervousness about its aesthetics franchise during a recession," said analyst Peter Bye of Jefferies & Co. "Nothing is immune to a recession."

When asked how a downturn might affect sales of Botox, wrinkle filler and other products used for cosmetic purposes, Allergan Chief Executive David Pyott told a conference call he saw no evidence that demand will weaken.

"Regarding a recessionary environment, as I have said consistently since October, we monitor very carefully what’s going on, in particularly the U.S. Everything is direct shipment, so there is no wholesale movements to kind of mask what is true demand in the middle," he said.

He added that there is "not only strong growth in the U.S., strong growth across the world."

The Irvine, California-based maker of breast implants, eyecare solutions and products used to surgically treat obesity, said fourth-quarter net profit rose to $160.3 million, or 52 cents per share, from $136.8 million, or 45 cents per share, a year earlier.

Adjusted earnings from continuing operations were 60 cents per share. Analysts, on average, had expected 58 cents per share, according to Reuters Estimates. Sales rose to $1.09 billion from $829.1 million.

Net sales of specialty pharmaceuticals jumped 24.5 percent in the quarter, while medical devices sales increased 70.1 percent.

Corey Davis, an analyst with Natexis Bleichroeder, said news that its second Phase III trial evaluating memantine as a treatment for glaucoma failed also weighed on Allergen shares in early trading.

This failure signals the memantine program is dead, said Davis, who has a "hold" rating on the stock.

"There’s no company that comes close to having such consistent and predictable earnings … but what gives me pause is the lack of an obvious late stage product," he said.

For 2008, Allergan forecast adjusted earnings of between $2.54 and $2.58 per share, well within the range of estimates on Wall Street, with total product net sales between $4.395 billion and $4.575 billion.

It sees first-quarter adjusted earnings between 50 cents and 51 cents per share, below the average estimate, with total product net sales between $1.040 billion and $1.070 billion.

"There’s some concern that they’re back-end loading EPS," added Jefferies’ Bye. He referred to the company issuing a more modest forecast for earlier in the year, then delivering stronger results later.

He has a "buy" rating on Allergen stock.

Oppenheimer & Co analyst Elliot Wilbur wrote in a research report that the company’s outlook "smells like the usual "under-promise, over-deliver" game that Allergan management has mastered."

Shares rose 37 cents to $65.41 on the New York Stock Exchange after falling to $61 earlier in the session.