Apple Inc. (NASDAQ:AAPL) iPhone 7 is expected to record weak sales when it comes out later this year, but this is not the only issue facing the iPhone maker in the coming months, states Citigroup. The firm’s analysts have maintained their Buy rating on the stock with a price target of $115, although Brexit is a cause of concern for the company’s sales.Apple Inc. (AAPL) Estimates Trimmed Over Brexit Fears

Brexit’s impact on Apple

In a note on Tuesday, a team of analysts led by Jim Suva projected Apple’s earnings to come in below the Wall Street’s estimates. The analysts partly blame this to the U.K.’s decision to leave the EU and subsequent currency fluctuations.

According to data from FactSet, around 2.3% of Apple’s revenue is exposed to the U.K. ,while 13.2% is exposed to the EU. Also the pound has hit a 31-year low against the dollar since the referendum. This suggests reduced buying power for U.K. buyers, dampening demand for Apple’s products in the country.

However, Citi analysts expect investors to see opportunities for Apple in large markets such as India and believe growth in services will support overall margins. Other analysts have also raised concerns about Brexit’s impact on Apple. In June, Cowen and Co. noted that the U.K.’s decision to exit the EU represents near-term demand uncertainty.

Revenue and EPS estimates lowered

Citi dropped its revenue expectations for the third quarter to $41.2 billion from its previous estimate and the Wall Street consensus of $42.2 billion. The firm also lowered its EPS estimate to $1.35 from $1.40 and dropped its fourth-quarter estimates as well, expecting the stock to remain range-bound during the seasonally slow summer and prior to the release of the iPhone 7. Apple will report its earnings on July 26.

“We are lowering our estimates for June and September quarters given potential for lower demand from macro uncertainty (Brexit related), currency volatility and lengthening replacement cycles (average replacement rate has gone from around 24 months in calendar year 2013 to about 28 months recently and our model implies replacement rates could extend to 30 to 36 months,” the analysts stated.

Apple’s ecosystem helps the company keep users by starting with one product, which usually leads to more products in the future, Citi notes.

“We believe it is only starting to make progress in software and services that will help create and monetize a consumer and corporate installed base.”

On Tuesday, Apple shares closed down 0.94% at $94.99. Year to date, the stock is down more than 11%, while in the last year, it is down almost 25%. The stock has a 52-week high of $132.97 and a 52-week low of $89.47.