Following the most hyped initial public offering (IPO) of 2014, Medibank Private Ltd (ASX: MPL) shares have slumped 16% in 2015, so far, to trade at just $2.02.
Underperforming the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) by around 17% this year, Medibank actually met its prospectus forecasts but has been unable to appease investors who paid the equivalent of 20x 2015's profits per share, during the IPO.
Previously, one of our top analysts, Matt Joass, estimated the fair value for Medibank Private shares was around $2.08.
So, despite soaring to over $2.50 earlier this year then falling heavily, investors choosing to buy shares in Medibank today would likely not be getting a 'bargain'. Indeed, price and value are two different things.
As we said at the time, investors could've found better value in its smaller peer, NIB Holdings Limited (ASX: NHF). So far in 2015 NIB shares are up 3.5%.
Whilst Medibank's share price may climb higher in the near term, prudent value investors should keep that $2.08 figure in the back of their mind and try to purchase shares at a significant discount to it, ensuring they are indeed getting a 'bargain'.
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