Morgan Stanley & Co. upgraded the shares of MBNA Corp. to "strong buy" from "outperform" on Tuesday, predicting the credit card specialist can maintain earnings growth this year despite growing delinquencies.

The upgrade comes as investors are worrying about rising consumer delinquencies. After Advanta Corp. announced unexpectedly large losses in its credit card portfolio in mid-March, MBNA's shares fell to $27.875 from $31.375 in just two weeks.

In trading Tuesday, MBNA shares rose $1.125 to $31.25 after bank analyst Jennifer Oliver Martin of Morgan Stanley said investors "should buy, and not bail" out of the stock.

"We think the market is confusing trends in the sector versus trends in the companies," said Ms. Martin, who recently took over coverage of the company.

"Bankruptcy numbers appear to have peaked," she said, adding that MBNA is steadily increasing its market share by focusing on marketing and technology, which will further bolster its ability to attract customers and design new products.

She joined a number of analysts in arguing that MBNA is more adept than its peers at pricing its products to risk.

Ms. Martin said she expects the company to produce more than 20% earnings growth for this year, and points out that the stock trades at a 25% discount to the Standard & Poor's 500.

She said that once first-quarter earnings are released she plans to raise her target price of $37 and her earnings estimates of $1.73 per share for 1997 and $2.16 for 1998.

"We expect margins in revenues to offset declines in asset quality later in the year," said Ms. Martin. "The idea in this business is knowing how to price to risk."

Other analysts, however continue to be cautious about the company. Leslie Nelkin of Furman Selz said that he has a "neutral" rating on the firm because the stock price is "fully valued."

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