AusGroup's outlook challenging

JPMorgan cuts AusGroup target price to $0.40 from $0.95 following recent 1Q09 results. Broker says engineering services company's results in line with expectations but outlook turned more challenging, "as operators begin to reassess their E&P plans, we believe the risk of a slowdown in orders from key customers is high." Adds declining commodity prices may also hurt demand in mineral, resources segment. Cuts FY09, FY10 net profit forecasts by 4%, 23%, respectively. But maintains Overweight rating on valuation grounds; "we believe that the year-to-date 85% correction in stock price has brought valuations to undemanding levels."