UPDATE 2-Sysco Q3 earnings beat Wall Street; shares rise

(Recasts, adds analysts' comments, updates share movement)

By Swagata Gupta

BANGALORE, April 28 (Reuters) - Food distributor Sysco Corp (SYY.N: Quote, Profile, Research) posted third-quarter earnings that beat market estimates as the strong performance of its Broadline segment helped offset sluggish restaurant sales and soaring food costs, sending its shares up more than 9 percent.

Sales at the Broadline segment, which distributes food and non-food products to traditional and chain restaurant customers, rose to $7.23 billion from $6.72 billion.

"I am surprised that the stock is up so much. I think people were expecting the company to be hurt more than they were by the challenging economic environment," Lehman Brothers analyst Meredith Adler said by phone.

The consumer environment is going to stay tough with the gas and food prices going further up, Adler said.

Adler has a "neutral" rating on the stock with a $34 price target.

"The company is aggressively managing operating expenses in an effort to counter food inflation-induced unit demand dampening and gross margin pressure," Goldman Sachs analyst John Heinbockel, who rates the stock at "neutral," said in a note to clients.

Sysco said food inflation, as estimated by its change in cost of goods, was 6.2 percent in the quarter.