"J&J's third-quarter results reflect the broad-based nature of the company's portfolio and the cost-cutting ability of the company," Bank of America analyst Glenn Novarro said in a research note.
Novarro said he believes investors "are underestimating J&J's earnings power" and that over the next three years the company can generate annual earnings-per-share growth of almost 10 percent despite the coming patent expirations on Risperdal and Topamax.
In view of the better-than-expected quarterly results, the company slightly raised its full-year 2007 profit forecast to between $4.10 and $4.13 per share.
Third-quarter sales jumped almost 13 percent to $14.97 billion, about $100 million higher than the Reuters Estimates forecast.
Global sales of prescription drugs rose 3.7 percent to $6.1 billion, but would have grown only 1.2 percent if not for positive foreign exchange factors.
Procrit sales plunged 27 percent to $380 million, hurt by studies showing that overly high doses of such anemia drugs can increase the risk of death among some patients.
A number of other J&J drugs lost ground due to competition from cheaper generics, including its Duragesic pain patch, whose sales fell 23 percent to $107 million.
But Topamax revenue jumped 14 percent to $498 million, while Remicade rose 7.5 percent to $648 million.
Sales of medical devices and diagnostics rose 6 percent to $5.2 billion, with sharply higher demand for J&J's disposable contact lenses, blood glucose monitoring and insulin delivery devices, orthopedic devices and products used in minimally invasive surgery.
But U.S. sales of the company's drug-coated Cypher stent fell more than 40 percent amid lingering concerns that such devices can increase the long-term risk of blood clots that cause heart attacks, and plunged by a similar magnitude overseas amid growing competition from rival products.
Revenue from J&J's consumer health-care products jumped almost 48 percent in the quarter to $3.6 billion, bolstered by the recent acquisition of Pfizer's array of consumer brands -- including Listerine mouthwash. Excluding the new Pfizer brands, consumer product sales would have risen 3.5 percent, J&J said.