Apple has already told investors to expect a substantial year-on-year decline in Q3 earnings when it reveals the numbers next week, so it’s no surprise that analysts are mostly downbeat in their predictions for the quarter. However, there is an optimistic note in most of the analyst notes summarized by Business Insider when it comes to the outlook for 2017 …

Apple’s guidance is for revenue in the $41-43B range, well down on the $49.6B achieved in the same quarter last year. The Wall Street consensus is almost slap bang in the middle of this range, at $42.11B.

Ironically, analysts believe that Apple could be hurt by better-than-expected sales of one particular iPhone: the SE. With the smaller form factor getting a big thumbs up from many of us, that is expected to have driven down the average selling price for iPhone.

While the UBS view that “there probably won’t be too many positives in the quarter” is widely echoed, most believe that the company will return to growth next year.

Wells Fargo expects a return to iPhone growth by the end of this year, and says that any good news at all next week could see the share price rally. BMO shares this view, predicting that 2016 iPhone sales will be better than expected. Kate Huberty, a noted Apple bull at Morgan Stanley, also believes that sales will pick up this year.

Stifel, in contrast, is pessimistic about iPhone prospects this year, but says this will be balanced by the upside of upgrades next year.

Three analysts pointed to Apple’s growing service revenues. UBS says it is “increasingly important to recognize Apple as a platform company” through the App Store and Apple Music, Needham points to Apple Pay and enterprise revenue, and Nomura expects a 20% in services revenue this year.

Baird points to the handicap of a strong dollar reducing profits or driving up prices overseas, with a consequent hit on demand, but Needham says that huge cash reserves makes Apple well-placed to ride out short-term storms.

Photo: Apple Store, San Francisco (Apple)

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