Define intrinsic value and valuation, then explain where perceived mispricing comes from

Valuation means estimating what an asset is worth, either from a model of its expected future returns or by comparison with similar assets. Intrinsic value is the worth a fully informed investor would assign, knowing the asset's cash flows and risk. When an analyst's estimate differs from the market price, there are two possible explanations: the market has mispriced the share, or the analyst's estimate is wrong. Put simply, estimated value minus price equals true mispricing plus estimation error. Only the first part earns an active manager a return, and prices may take a long time to move towards intrinsic value. So a large apparent gap should first send the analyst back to check their own inputs before any trade is recommended.