Apple Inc. (NASDAQ: AAPL) is set to report its fiscal third-quarter financial results fairly soon, but how is this tech giant going to perform? Analysts have tended to take an overly optimistic view of Apple, or at least historically that’s the case. However one key analyst thinks that this quarter might not be as positive as once thought.

Oppenheimer reiterated a Perform rating as well as its cautious view of the iPhone 7. The firm lowered its estimates again, and reminded investors of the longer term view as Oppenheimer looks beyond the upcoming product cycle. It believes questions such as China or the replacement cycle that were debated in previous earnings will matter little, as investors will focus on iPhone 7 release in the fall.

The firm does not expect that the third-quarter results and fourth-quarter guidance will change its view on Apple. Oppenheimer expects the iPhone 7 product cycle to be weak due to lack of major improvements. As a result the firm lowered its fiscal 2017 revenue and earnings per share (EPS) estimates to $209 billion on $8.18 per share from $222 billion on $9.04 per share, based on assumed lower iPhone and Apple Watch shipments.

Oppenheimer downgraded Apple back on April 27 based on a bearish outlook for the iPhone 7 cycle. The firm believes incremental design changes this year will not be compelling enough to drive an upgrade cycle and continue to believe the 7 cycle will undersell the 6s cycle. The firm lowered its fiscal 2017 iPhone shipments to 197 million from 213 million.

The firm further believes the updates in iOS 10 (to be released with iPhone 7) announced during WWDC are reactions to mounting pressure from platform competitors that offer products and services that are device-agnostic, such as voice assistant, AI and messaging apps.

In the report, Oppenheimer detailed:

We believe more drastic design changes will come to the iPhone in 2017, which may include cameras capable of depth sensing and 360-degree capture, OLED display, and VR headset accessories. Some of our predictions (AI and a more open Siri) likely will come earlier than expected to iOS 10 this year.

Shares of Apple were up fractionally at $96.57 Friday morning, with a consensus analyst price target of $124.25 and a 52-week trading range of $89.47 to $132.97.

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