NationsBank Corp. was one of few banks to gain in the stock market Monday, after Lehman Brothers bank analyst Michael Mayo raised his earnings estimate and price target for its shares.

Mr. Mayo raised his earnings estimate for 1996 to $8.10 from $8.05 a share. He also boosted his 1997 estimate to $9.10 from $9.00 and raised his 12-month price target to $100 from $90.

NationsBank's share price rose $1 to $75.625, while the Standard & Poor's bank index fell 1.06%.

The upgrading comes as the market is warming to a bank whose stock had been hurt by concerns over its securities portfolio, a seemingly unfocused businesses strategy, and over dilutive acquisitions.

"NationsBank is a bank people love to hate," said Moshe Orenbuch, a bank analyst at Sanford C. Bernstein & Co.

Investors have remained concerned about a host of issues, many of which are not unique to the bank, the Bernstein analyst said.

"There's a belief that the company relies too much on interest rate bets," Mr. Orenbuch said.

Other investors have expressed concerns about the growth of the bank's investment banking business.

But "there's good revenue growth and good expense control, as well as an improving psychological environment for the bank," Mr. Orenbuch said.

NationsBank has money-losing bond and derivatives positions that are rolling off the books, which will free up capital, said Mr. Orenbuch.

The company hasn't specifically indicated a use for approximately $1.5 billion in capital, but Mr. Orenbuch said it very well could be used for a share repurchase.

Investors are beginning to see the bank as a "pretty attractive package" because of its good business prospects and the potential share repurchase, Mr. Orenbuch said.

"The concern is that NationsBank wants to be all things to all people," Mr. Mayo said. But he said a conference call last week, as well as a recent meeting with NationsBank management, convinced him that the bank has strong earnings prospects and good expense control.

NationsBank stated that it wants to remain dedicated to its traditional business lines.

"NationsBank doesn't want to become a Merrill Lynch," Mr. Mayo said. The bank is building its investment banking business to "provide one-stop shopping to middle-market customers."

NationsBank boasts a 25% share of the small and middle-market business in its markets, and the bank expects to capitalize on that by selling more services to existing customers, Mr. Mayo said.

Mr. Mayo said Hugh L. McColl Jr. also addressed concerns about the possibility of a dilutive acquisition.

"Mr. McColl reminded people that he is 60 years old and owns 430,000 shares," Mr. Mayo said. "What he's saying is that he cares about what the stock price does."

Despite the slippage in the bank market, J.P. Morgan & Co. also posted a gain, rising $62.5 cents to close at $83.125.

Analysts said there was no news event driving the stock in the opposite direction from the rest of the market. Some suggested that the movement is merely a product of continuing volatility among bank stocks.

"There are jitters on the buy and sell sides on economic fundamentals, monetary policy, and capital outflows," said Ray Soifer. "All these things have been causing markets and sectors to move around rather crazily."

Separately, Wheat First Butcher Singer analyst David Stumpf raised Jefferson Bankshares, Charlottesville, Va., to "hold" from "underperform."

Mr. Stumpf raised his 1996 earnings estimate to $1.80 a share from $1.70, citing lower operating costs and a improved net interest margin.

Jefferson's stock gained 12.5 cents to close at $21.75.

Chase Manhattan Corp. and First USA Inc. were among the losers for the day, with the money-center bank falling $2.625 to $73, and the credit card specialist dropping $1.125 to $49.875.

Another noted gainer was Fifth Third Bancorp, which rose $1.25 to close at $51.

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