MANSFIELD – Covidien Plc said Tuesday its fiscal fourth-quarter profit dropped 86 percent because of charges related to a tax agreement for its former parent company, Tyco International Ltd., and other one-time expenses.

But Wall Street cheered the results, focusing on the company’s improved outlook for fiscal 2010 and growth in its medical devices division.

Covidien posted a profit of $56 million, or 11 cents a share, for the three months ended Sept. 25, down from a profit of $409 million, or 84 cents a share, a year earlier. Revenue was flat at $2.7 billion.

Excluding charges, Covidien said earnings rose to 72 cents from 68 cents last year. Analysts polled by Thomson Reuters had forecast earnings of 70 cents on $2.62 billion in sales.

Covidien said revenue increased 4 percent measured in constant currencies and if sales of discontinued painkiller oxycodone are excluded.

Sales in Covidien’s largest division, medical devices, rose 7 percent year over year. Pharmaceutical product sales fell 10 percent.

For the 2009 fiscal year that ended Sept. 25, Covidien reported net income of $907 million, or $1.79 per share, down 13 percent from $1.36 billion, or $2.70 per share, a year earlier. Excluding charges, profit totaled $1.43 billion, or $2.84 a share. Annual sales rose 3 percent to $10.68 billion.

Covidien said it expects revenue to increase by 6 percent to 9 percent in fiscal 2010 to between $11.32 billion and $11.64 billion, partly because the weaker U.S. dollar will make its products more competitive overseas.

The company had previously forecast sales growth of 4 percent to 7 percent, and analysts polled by Thomson Reuters prior to the new guidance’s release had forecast revenue of $10.78 billion in the fiscal year that ends next September.

“Strength in medical devices should help put industry volume and hospital inventory de-stocking concerns to rest,” Morgan Stanley analyst David Lewis said in a note to clients quoted by Reuters.

Covidien stock closed at $45.13 on Tuesday, up 2.4 percent from the previous day. The shares fell 0.8 percent to $44.76 at 11:37 a.m. Wednesday in New York Stock Exchange trading.

Additional information is available at covidien.com.