JPMorgan's Dae K Lee is raising Redfin Corp ( RDFN )‘s stock price target from $7 to $12.50, matching Rocket Companies ( RKT )' acquisition price.

The deal values Redfin's equity at about $1.75 billion, pegging it at two times its projected 2026 revenue.

Yet, the market isn’t fully convinced, with Redfin stock trading approximately 12% below the offer price.

Read Also: Warren Buffett’s Real Estate Brokerage, Compass Discuss Deal

Regulatory Hurdles? This Analyst Isn't Sweating It

"We do not anticipate significant regulatory risk to the deal," Lee says.

While Rocket dominates mortgages, Redfin's mortgage originations were just $4.6 billion in 2024—minuscule next to Rocket's $101 billion and the U.S. total of $1.7 trillion.

On the brokerage side, Redfin's 0.76% U.S. market share won't move the needle much either.

Still, investors see an open window. The deal carries a $65.5 million termination fee and a no-shop provision, but Redfin can entertain better offers.

For now, though, Rocket's grip looks firm.

Zillow Faces A Shifting Market

Meanwhile, Zillow Group Inc ( ZG ) faces a reshaped landscape. As Lee notes, it must compete with "well-capitalized competitors," including News Corp's realtor.com and CoStar's Homes.com.

Zillow’s average monthly unique visitors are "2x" and app DAUs are "4x" those of its closest rival. With ~80% of consumers heading straight to Zillow ( ZG ), brand power remains its moat.

For Redfin, the discount to Rocket's offer suggests Wall Street is pricing in some uncertainty.

But if Lee's read is right, the spread could close fast.

Read Next:

Warren Buffett Plans To Sell His Real Estate Brokerage, But It’s ‘Not… A Bet Against US Home Prices,’ Says Analyst As Fed Expects To Keep Rates Unchanged

Image: Shutterstock