* Q1 EPS $0.27 vs $0.10 year ago
* Shares down 1.89 pct at C$9.88 (Adds CEO comments, share price; in U.S. dollars unless noted)
TORONTO, May 12 (Reuters) - Shares of Neo Material Technologies NEM.TO fell as much as 7 percent on Thursday, despite the fact the rare earth company's first quarter profit more than doubled and easily beat analyst expectations.
The Toronto-based company reported a first quarter profit of $31.9 million, or 27 cents a share, compared with $12.4 million, or 10 cents a share, last year.
Analysts, on average, had expected earnings of 20 cents a share, according to Thomson Reuters I/B/E/S.
Neo Material shares fell as much as 7.1 percent to C$9.35 early Thursday on the Toronto Stock Exchange, before rebounding to C$9.88, down 19 Canadian cents or 1.89 percent.
Fraser Mackenzie analyst Dev Bhangui said the drop could be due to a general retreat by rare earth and other resource companies, as well as some profit-taking on the stock, which is up almost threefold from a year low of C$3.31 in May of 2010.
Revenue rose 30 percent to $132.8 million compared with $65.1 million in the first quarter of 2010.
"I feel pretty good about the business," Chief Executive Constantine Karayannopoulos said in a conference call. "I feel pretty confident that the level of performance you are seeing will continue for the foreseeable future."
Neo Materials produces rare earth magnetic powders, used in smartphones and energy-efficient electronics, as well as various rare earth, rare metal and zirconium products. Its processing facilities are in China.
The company said revenue at its Magnequench magnetic products division rose 16 percent to $55.1 million, while revenue at its materials division jumped 37 percent to $83.6 million.
Karayannopoulos said he expects quotas on Chinese exports of rare earths in the second half of the year to be similar to the first half, around 15,000 tonnes.
$1=$0.97 Canadian Reporting by Julie Gordon in Toronto and Amruta Sabnis in Bangalore; editing by Rob Wilson