By Shaina Mishkin

The housing market could break out of its doldrums this year. The real estate brokerage Compass doesn't need a big market boost for its stock to move higher, J.P. Morgan's internet analyst says.

New-York based Compass completed its $1.6 billion acquisition of the brokerage Anywhere earlier this month. The deal unites the two largest real estate brokerages by sales volume and brings an estimated 340,000 real estate professionals, along with franchises such as Coldwell Banker, Century 21, and Corcoran, under Compass's umbrella.

"Compass's transformational M&A, unified tech platform, and accelerating margin inflection position the company as the premier consolidator in U.S. residential real estate," J.P. Morgan analyst Dae K Lee wrote in a Monday note.

The analyst initiated coverage of Compass with an Outperform rating. The analyst's December 2026 price target of $15 implies a roughly 13% premium compared with the stock's recent close of $13.33. The stock is up 3.6% in Monday morning trading.

Economists are calling for home sales to improve this year following three straight years of the fewest sales since the mid-1990s as tough conditions for buying a house ease. The scope of that recovery depends on the path forward for mortgage rates, as well as the availability of homes for sale.

"Our estimates do not fully bake in the cost synergies from the Anywhere transaction, nor do we assume a meaningful improvement in the housing market toward mid-cycle levels," the analyst wrote. That provides "additional upside should execution or macro conditions exceed our base case."

Compass's new scale and technology platform "create a widening competitive moat," Lee wrote. Compass provides its agents with a suite of in-house marketing, listing, and buyer communication tools.

"By migrating Anywhere's agents onto the proprietary Compass platform -- built through $2 [billion] in investments -- Compass can amortize R&D over a larger base, driving efficiency and widening the technology gap," the analyst wrote. "This unified system enhances agent retention and productivity while unlocking international referral opportunities in 120 countries."

He also sees savings through the combination, and a benefit from Anywhere's higher-margin franchise business. Compass also "has outlined a credible path to deleveraging" its debt from the Anywhere acquisition, he wrote.

"While we acknowledge execution risks around integration and macro sensitivity -- including potential headwinds from higher rates or softer housing inventory -- we see the upside from platform scale, synergy realization, and margin expansion as materially outweighing these risks, " the analyst wrote.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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January 26, 2026 10:35 ET (15:35 GMT)

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