P/E ratios and fair value

Need some clarification on analysing whether a stock is too expensive for current PE ratio



Example:

Current PE: 60

Current price of stock: $2

EPS current: $0.02



Here is where I started dabbling - please correct if I'm wrong

Price to be neutral: Current PE * EPS current = $1.20



Question: Does that mean that if stock drops to $1.20, then it would be fair value (neither bargain nor too expensive to buy)