Nu (NU) is positioned to become one of Latin America's most valuable banking franchises, with a path to a $100 billion valuation by 2026, Morgan Stanley said in a note Monday.

The firm said it hosted an investor roundtable with Nu's chief financial officer after the company's Q4 results. The CFO emphasized that near-term efficiency will be pressured by return-to-office, artificial intelligence, and international expansion investments, but core operating leverage and a lower tax rate should still drive solid earnings growth.

Morgan Stanley said it is raising its 2026 GAAP net income forecast for Nu by 3% to $4.40 billion, 2027 by 4% to $6.73 billion, and 2028 by 5% to $9.16 billion, reflecting stronger credit growth, a somewhat weaker efficiency ratio, and a lower effective tax rate.

The firm said Nubank "is uniquely positioned to build one of the largest and most valuable banking franchises in Latin America," supported by strong technology, customer satisfaction, competitive pricing, and attractive unit economics. "We think the market continues to significantly underestimate Nubank's ability to scale profitably - especially through deeper cross-sell in Brazil," it added.

The bank said its bottom-up model suggests Nu could reach a $100 billion valuation by year-end 2026, up from about $75 billion today.

Morgan Stanley raised its price target on Nu to $21 from $18 and kept its overweight rating.

Price: 14.97, Change: -0.01, Percent Change: -0.07