BTIG’s Walter Piecyk sent his clients some deeply mixed signals Monday, two weeks before Apple (AAPL) is scheduled to report its second fiscal quarter earnings.

On the one hand, he’s taken a new look at estimates he published in January and revised them sharply upward — nearly 39% in EPS alone  (see table at right).

On the other, he’s issued a rare Apple downgrade — to “neutral” from “buy.”

“We believe,” he wrote, “that investors should take a breather during the expected strength of this quarter and the rapid rise in the stock and take a moment to consider;

• the changing dynamics in the post-paid wireless industry, which has seen margins squeezed by the frequent upgrade activity of iPhone customers,
• the sustainability of a $600 iPhone and possible need for a price cut, and
• the elevated expectation that the company will deliver another revolutionary product into the market.”

The note is rather lengthy, but the thrust of it is that the carriers, having helped fuel iPhone fever by offering deep subsidies and easy upgrade terms, have collectively decided to tighten the screws: (I quote)

The commentary by wireless operators is likely to be decidedly more firm in how they plan to continue to hold back the rising phone upgrade rates that are hurting their margins. Even weak operators like Sprint, which has a large contractual commitment with Apple, will likely experience a decline in iPhone sales based in part on changes to its upgrade policies last year. They will not be alone as we expect a similar trend at Verizon, Deutsche Telekom, Vodafone, America Movil and Telefonica, to name a few. In the United States, we expect iPhone sales to decline 4 million sequentially to 9 million with the largest impact coming from AT&T, Apple’s largest customer.

This assumes the carriers have the power to slow the Apple juggernaut. We’ll find out soon enough. Apple will report its Q2 earnings — and offer guidance for the current quarter — after the markets close on April 24.

One more thing: Piecyk also removed his $600 per share Apple price target, noting that it had been “surpassed.” Indeed it has. On Monday, the stock hit a new intraday record of $639.84 and closed at an all-time high of 636.23.