While MultiPlan Corporation (NYSE:MPLN) might not have the largest market cap around , it saw significant share price movement during recent months on the NYSE, rising to highs of US$1.70 and falling to the lows of US$0.68. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether MultiPlan's current trading price of US$0.68 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at MultiPlan's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In MultiPlan?
MultiPlan appears to be overvalued by 37% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$0.68 on the market compared to our intrinsic value of $0.49. This means that the opportunity to buy MultiPlan at a good price has disappeared! Furthermore, MultiPlan's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from MultiPlan?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. MultiPlan's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in MPLN's positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe MPLN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on MPLN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the positive outlook is encouraging for MPLN, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for MultiPlan you should be mindful of and 1 of these makes us a bit uncomfortable.
If you are no longer interested in MultiPlan, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.