NEW YORK (CNNMoney.com) -- Merrill Lynch's third-quarter earnings more than doubled from last year as the investment bank benefited from the closing of its merger between Merrill Lynch Investment Managers and BlackRock.

Shares of Merrill Lynch (up $0.55 to $84.66, Charts) outperformed its peers on the news, climbing just under one percent. The stock hit a new 52-week high, prompting analysts to become cautious on the group.

David Trone, analyst at Fox-Pitt Kelton said the stock prices among the investment banking group have now become fully priced and advised investors not be aggressive in loading up on shares going forward.

New York-based Merrill reported earnings of $3.17 a share, trouncing analyst estimates of $1.47, according to earnings tracker Thomson First Call. Merrill Lynch recorded a $2 billion benefit from its merger.

Excluding the benefits from the BlackRock merger (Charts), the company's third-quarter earnings rose 43 percent to $2 a diluted share, making it the highest earnings of any previous quarter for the company. The company earned $1.40 a share in the comparable period one year ago.

BlackRock closed its purchase of Merrill Lynch's asset management arm in late September, although Merrill retains a 49.8 percent stake in the company.

"We realized a major strategic milestone at the end of the quarter in the completion of the merger with MLIM and BlackRock, which will enable us to enhance our participation in asset management through our ownership of just under half of a better-positioned company with stronger growth prospects," Stan O'Neal, chairman and chief executive of Merrill Lynch, said in a statement.

The company's MLIM division posted record third-quarter revenues of $700 million, up 54 percent from the comparable period in 2005. Assets under management prior to the closing of the BlackRock merger totaled $598 million, up 14 percent from a year ago.

But O'Neal cheered the company's performance in all three of its business units.

Merrill's global markets and investment banking unit posted revenues of $4.4 billion, up 21 percent from a year ago, driven by strength in commodities and credit trading that offset weakness in the firm's principal investing results.

Higher merger and acquisitions advisory fees also climbed while debt and equity offerings declined. That pushed investment banking revenue to $783 million in the third quarter.

Analysts had previously been concerned that volatile markets and economic concerns would weigh on the investment banking sector. Some of those fears were allayed by generally positive reports from Merrill's peers, Goldman Sachs (Charts), Lehman Brothers (Charts) and Morgan Stanley (Charts) - which report on a fiscal calendar.

Market activity improved toward the end of the third quarter, which gave Merrill an advantage over its peers and helped lift results. And fourth quarter activity should be even stronger for investment banking, said Merrill's financial chief Jeff Edwards on a earnings call with analysts.

Edwards said while investment banking activity isn't as robust as it was in previous quarters, the company's pipeline of investment banking originations, especially when it comes to debt offerings, are at record levels. And he said the company was optimistic that the offerings would be completed in the fourth quarter.

"In the third quarter, you had both a challenged environment and a seasonal slowdown," he said. "The markets now appear to be considerably more constructive for the execution of that pipeline."

He added that its pipeline of investment banking deals are up domestically, as well as internationally.

And Merrill Lynch also showed modest strength in its global private client division despite a seasonal slowdown in client activity. The unit, which is the largest in the nation, reported third-quarter revenues of $2.8 billion, up 5 percent from last year due to higher fee-based revenue and net interest profit, the company said.

Lauren Bender, analyst at independent research and consulting firm Celent LLC, said that while Merrill's earnings were impressive and above analyst expectations, the company's private client segment's results were disappointing.

She added that Merrill is facing additional challenges from online brokerage firms and banks that are eager to steal market share from the company.

"However, Merrill Lynch's success in recruiting and retaining top-performing financial advisors should help the company hold its own against the online brokerage firms, the banks and the wealth management firms that are all going after Merrill Lynch's private client base," Bender said.

To that end, Merrill Lynch's Edwards told analysts that the recruiting environment for talent continues to be competitive and aggressive but said the company has had success in recruiting financial advisors from some if its largest competitors. Year to date, the company hired 540 financial advisors in its private client business and has had a low turnover rate, he said.

Merrill Lynch's Edwards also said the board of directors authorized an additional $5 billion in stock buybacks and the company expects to be aggressive in the fourth quarter in repurchasing its stock.

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