Austin Engineering's (ASX:ANG) fiscal first half is expected to see the majority impact of its guidance downgrade, implying a strong recovery into the second half of the fiscal year, according to a Wednesday Euroz Hartleys note.

The company on Wednesday cut its revenue guidance for fiscal year 2026 to the range of AU$370 million to AU$380 million, from its previous guidance of AU$390 million to AU$410 million.

Euroz Hartleys said that the company's balance sheet remains healthy, and it is still expected to report positive free cash flow in the fiscal year, regardless of the operational challenges and remediation measures.

Euroz Hartleys said its buy rating and a price target of AU$0.70 on Austin Engineering are currently under review pending the release of formal research in the short term.