UPDATE 2-Raytheon's 3rd-quarter profit climbs 5 percent, boosts forecast

(Updates shares, adds revenue miss)

Oct 26 (Reuters) - Tomahawk missile maker Raytheon Co reported a 5 percent rise in quarterly profit on Thursday, selling more laser-guided bombs and GPS-guided artillery rounds, and bumped up its annual sales and profit forecasts for the third time this year.

Raytheon shares dipped 0.2 percent to $188.73 in early trading.

Raytheon posted net sales of $6.28 billion, missing Wall Street estimates of $6.33 billion, according to Thomson Reuters I/B/E/S. Sales at its second largest unit, Space and Airborne Systems, were flat from the previous year with profit margins down slightly.

Raytheon, which makes the Patriot missile system, is benefiting as U.S. and allied military operations demand more weapons to take on heightened global conflicts and possible threats.

The Waltham, Massachusetts-based company raised the lower end of its 2017 sales forecast by about $200 million to $25.3 billion, and kept the top end unchanged at $25.6 billion.

"This is now 5 to 6 percent sales growth over 2016, and our prior range was 4 to 6 percent," Raytheon's Chief Financial Officer Toby O'Brien told Reuters.

Raytheon increased its full-year earnings forecast from continuing operations to $7.45 to $7.55 per share, from $7.35 to $7.50 per share, partly due to lower interest expenses and a reduced tax rate.

The company sees 2017 operating cash flow from continuing operations of $2.8 billion to $3.1 billion.

Raytheon and other U.S. weapons makers are expected to benefit in the coming year from an increase in overall defense spending under President Donald Trump's administration.

Sales at its missile systems unit, its biggest by revenue, surged 9.9 percent to $1.95 billion in the quarter, helped by higher sales of the Paveway family of laser-guided bombs and the Excalibur GPS-guided precision projectiles, the company said.

Operating margin in the unit rose 1.1 points to 14.4 percent.

Sales at its integrated defense systems business, which makes the Patriot missile system and surveillance and search radars, rose 4.3 percent to $1.39 billion, on higher sales from an international early warning radar program.

The operating margin rose 0.8 points to 16.6 percent.

Raytheon's overall income from continuing operations rose to $568 million, or $1.97 per share, from $541 million, or $1.84 per share, a year earlier.

Total sales increased 4.5 percent to $6.28 billion.

Raytheon's shares have surged 33.2 percent this year, outperforming a 14.2 percent increase in the benchmark S&P 500 index. (Reporting by Mike Stone in Washington and Ankit Ajmera in Bengaluru; Editing by Bernadette Baum and Jeffrey Benkoe)