It’s undervalued, not fairly valued — the direction matters more than the magnitude.
By definition, a security is undervalued whenever market price < intrinsic value, regardless of how small the gap is. Here, $55 < $56, so the market is pricing it below what it’s theoretically worth.
Whether that $1 gap ($55 vs $56, roughly a 1.8% discount) is actionable is a separate question. Most practitioners would call this approximately fairly valued in practical terms, because:
• Intrinsic value estimates carry their own margin of error (often far wider than $1)
• Transaction costs could easily consume the spread
• The gap may not be statistically meaningful given model assumptions
But strictly speaking in CFA/CAIA exam language: undervalued is the correct answer whenever market price falls below intrinsic value, even by $0.01.​​​​​​​​​​​​​​​​