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Walgreen's shares rose 3.3 percent in early trading as Jefferies & Co raised its rating on the company to "buy" from "hold" before the results were announced and boosted its price target to $45 from $29.

Sales at Walgreen's drugstores open at least a year rose 0.4 percent compared with September 2009, the company said Tuesday -- better than the 1.1 percent decline analysts had expected, according to Thomson Reuters data.

Analysts have said Walgreen has benefited from stronger pricing and fewer markdowns for general merchandise.

Pharmacy same-store sales increased 0.3 percent, much better than the 1.7 percent decline analysts had expected. The pharmacy business accounted for about two-thirds of total sales for the month.

The pharmacy same-store results were down 2.8 percentage points due to generic drug introductions and they took a 0.8 percentage-point hit as fewer people came down with coughs, colds and flu, the company said. Fewer flu shots also meant the pharmacy's same-store sales slipped 0.7 percentage point.

Prescriptions filled rose 0.8 percent on a same-store basis, including 1.4 percentage points due to more patients filling 90-day prescriptions, Walgreen said. Lower incidence of flu hurt same-store prescriptions by 1.5 percentage points, while prescriptions filled was down 1.6 percentage points due to fewer flu shots.

Flu shots administered at pharmacies and clinics in September totaled about 2 million, with nearly 2.25 million flu shots having been administered so far this season.

Kermit Crawford, Walgreens president of pharmacy services, said in a statement that the company faced difficult comparisons versus last year, when demand for flu vaccine was so heavy due to H1N1 pandemic. However, he said the company has already administered nearly 40 percent of the about 5 million shots it provided in the first quarter of last fiscal year when it ran out of vaccine late in the quarter.

Total front-end sales rose 0.7 percent on a same-store basis, better than the 0.1 percent increase analysts had expected.

The company also said it opened 24 stores during September, including four relocations, three acquisitions and four closures. It had 8,065 locations at the end of the month.

Overall September sales rose 5.3 percent to $5.64 billion. Duane Reade stores, acquired in April, contributed 2.8 percentage points to the total increase, but were not included in any same-store results.

Walgreen shares rose 3.3 percent, or $1.12, to $34.23 in early New York Stock Exchange trading.

(Reporting by Ben Klayman, editing by Gerald E. McCormick and Maureen Bavdek)