British keyhole surgery firm Gyrus Group Plc posted forecast-beating 2006 earnings, driven by strong demand for its core hysterectomy equipment, and was upbeat about its move into general surgery.

Chief Financial Officer Simon Shaw told Reuters the firm could now target a market of around two million surgical procedures a year with new products such as its PlasmaCision technology, which both cuts and seals tissue.

This compares with its core hysterectomy market, which is expected to total around 150,000 procedures by 2010.

"We've got a good chance of getting a healthy slice (of the two million-procedure market)," Shaw said in a telephone interview, though he declined to give a forecast and noted Gyrus would be up against tough competition from the likes of Tyco and Johnson & Johnson.

Gyrus said earnings per share before goodwill and one-off items rose 20 per cent to 17.1 pence in 2006, on a 42 per cent rise in revenue to £213 million.

Analysts' average earnings forecast was 16.5 pence, according to a Reuters poll of four brokers.

At 1015 GMT, Gyrus shares were up 2.6 per cent at 440-1/4 pence, off an earlier high of 444 pence, and valuing the business at about 647 million pounds.

Bridgewell Securities analysts were pleased with the results, but kept a "neutral" rating on Gyrus shares, noting they already trade at a premium to the sector. Gyrus trades at 21 times forecast earnings compared with a UK medical equipment sector average of 19 times, according to Reuters Estimates.

Gyrus said it expected to continue improving its operating margin, which reached 16.5 per cent in 2006, toward its target of 20 per cent in 2008.

But results this year could be held back by a weak US dollar, it said. Gyrus makes over 80 per cent of sales in the United States.

Executive Chairman Brian Steer said the firm was not looking for any big acquisitions, and that he was not aware of any bid interest in Gyrus.