The iPhone 7 is widely expected to be only a small incremental update, which has set Wall Street buzzing about what this means for Apple (AAPL) stock. Is a return to growth for iPhone units imminent, or will we have to wait another year for it? Does Apple (AAPL) stock still work, or should investors head for the hills? Of course the short answer is that the iPhone maker remains a darling of analysts, and that’s unlikely to change any time soon.

Rumor roundup for the iPhone 7

Because the iPhone 7 is expected to have only small updates, RBC Capital Markets analyst Amit Daryanani doesn’t expect it to trigger the same “healthy uptick” previous numbered cycles have brought. Despite this, he said in a report dated August 5 that he still sees plenty to like about Apple stock and believes it will still work.

He expects the iPhone 7 to be released around September 16 with preorders starting around September 9. He expects an updated A10 processor made by TSMC and believes Apple (AAPL) will remove the 3.5mm standard headphone jack starting with this year’s model, a rumor that has been widely reported. He also predicts that the company will improve the water resistance and that the entry level memory configuration will be bumped up from 16GB to 32GB.

Daryanani believes the iPhone 7 Plus will have a dual-lens camera that offers quality similar to that of SLR cameras and that it will have 3GB of DRAM. He also thinks it’s possible that the base iPhone will have DRAM as well. He expects both the iPhone 7 and 7 Plus to have faster upload and download speeds as well.

iPhone 7 Plus may be supply constrained

The RBC Capital analyst adds that the iPhone 7 Plus could be supply constrained as he believes that about a third of new iPhone sales are skewed toward the larger model, especially during the first phase of the launch. He also notes that using a dual-lens camera model for the Plus model could impede production of it due to limitations on modules and problems with yield at Apple (AAPL)’s suppliers.

Although he doesn’t mention this, there’s also the possibility that if the iPhone 7 Plus does have a dual-lens camera and if its smaller counterpart doesn’t have one, demand could be skewed even further toward the Plus model.

Daryanani also echoed comments we’ve been hearing a lot about replacement cycles being lengthened even further beyond where they currently stand. If this trend continues, he said it could cause headwinds on revenue. He’s projecting shipments of 210 million iPhones in calendar year 2016, which implies a 9% decline in units and a 29-month replacement cycle, compared to 27 months last year. He also believes that the replacement cycle could lengthen to 31 months through the iPhone 7 cycle or through the end of the 2017 calendar year.

The analyst projects $46.9 billion in sales and $1.66 per share in adjusted earnings for Apple (AAPL)’s September quarter, which is just a bit ahead of consensus.

Earnings momentum to support Apple stock

Speaking of earnings, UBS analyst Steven Milunovich said in a report dated August 4 that the correlation between Apple’s earnings momentum and stock performance has tightened over the last two years.

Apple Stock chart

He noted that Apple (AAPL)’s strong growth in fiscal 2015 corresponded with outperformance in its stock, and then the earnings contraction in fiscal 2016 came with underperformance in the stock. He believes the 23% decline in earnings in the June quarter will be the bottom as he projects a 17% decline in the December quarter followed by a 2% decline in the December quarter. From there, comparisons will ease.

iPhone 7 cycle may signal pent-up demand for iPhone 8

The UBS analyst also said that he is often asked when investors will start looking to the iPhone 8 and fiscal 2018. He explained that “in theory,” Apple (AAPL) stock is discounting the company’s long-term results, but he doesn’t expect the iPhone 8 cycle will come into focus until the December quarter results are reported in January because that’s when we will finally see how the iPhone 7 cycle will be shaping up.

The reason for this is because the strength of the iPhone 7 cycle will provide a clue about how much pent-up demand there will be for the iPhone 8. In other words, a stronger iPhone 7 cycle will mean less pent-up demand for the iPhone 8. Milunovich estimates that 84% of the value of Apple (AAPL) stock comes from “capitalizing current earnings,” while just 5% goes toward the iPhone maker’s long-term results after three years, which he sees as being “too negative.”

Apple stock iphone 7