NEW YORK (CNNMoney.com) -- The outlook for investment banking remains strong for Lehman Brothers, despite growing concerns on Wall Street over slowing economic conditions.

Those positive comments, issued by Lehman's (up $2.08 to $70.10, Charts) financial chief Chris O'Meara Wednesday at the company's third quarter earnings call with analysts, mirrored rival Goldman Sach's outlook issued Tuesday and helped his company's stock climb over 1 percent.

Lehman Brothers reported surprisingly strong third quarter earnings Wednesday, posting net income of $1.57 a share. That handily beat analysts expectations of $1.49 a share, according to earnings tracker Thomson First Call.

It was the second positive earnings report for the brokerage industry after Goldman Sachs (Charts) kicked off earnings season for brokerages by surprising analysts with its resilience in the face of some major market and economic concerns.

Analysts had voiced concerns in recent weeks that the brokerage industry could come under fire in the third quarter as volatile markets and increased economic concerns raised the risk that trading would weaken and corporations would become averse to dealmaking.

But Lehman's CFO said the company's investment banking fees pipeline is at record levels and he expects corporations to continue to pursue growth through M&A deals and equity offerings.

"Despite recent postponements, clients are eager for markets to stabilize in order to raise capital," O'Meara said.

Poor market conditions did take a toll on the company's investment banking revenues, which fell 11 percent to $726 million from the third quarter of 2005. Lehman blamed the decline on a decrease in completed M&A transactions and equity origination volume.

O'Meara said that most of the equity deals pulled during the stagnant market environment in June and July have since been added to Lehman's pipeline of deals.

Overall, Lehman's investment banking pipeline includes $422 billion of equity offerings, $359 billion worth of planned M&A deals and $86 billion of debt offerings. He said the pipeline of debt deals are particularly strong in the fourth quarter, with over $70 billion in high-yield debt products expected to come to market.

And O'Meara said the the number of equity deals slated for the fourth quarter are composed of energy, industrial and financial institution deals.

While its investment banking news was positive, some analysts said that Lehman's sequential trading results were disappointing.

Unlike Goldman Sachs, Lehman Brothers was able to grow trading revenues from last year. Trading revenues climbed almost 13 percent to $2.85 billion but fell almost 8 percent from the second quarter.

"A lot of analysts are hanging their hats on the investment banking pipeline but that's only a third of Lehman's business," said David Easthope, analyst at independent research and consulting firm Celent LLC. "But trading is two-thirds of its business and, in reality, there you're seeing a downward trend."

Easthope said Wall Street should look to the fourth quarter to see if trading results continue to be weak. If so, that would defuse the argument that trading results for brokers fell in the third quarter due to seasonal weakness.

"Next quarter might be the real make or break for the stocks," he said. "If you have two down quarters sequentially, that could indicate a trend."

Lehman said its equity trading business, which surged 31 percent from the comparable period a year ago, benefited from "solid customer flow activity in the cash and prime brokerage businesses."

It was particularly notable given the tough market environment over the summer, analysts said.

David Trone, analyst at Fox-Pitt Kelton in a research note said Lehman has the smallest prime brokerage business of the four brokers slated to report fiscal third quarter earnings.

"This was a blessing in disguise, since prime brokerage was probably the most challenged business during the period," he said.

With both Lehman Brothers and Goldman Sachs having reported strong quarters, Wall Street is looking towards Bears Stearns (Charts) which reports Thursday and Morgan Stanley (Charts), which will issue its third quarter earnings release on Sept. 20.

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