Apple (NASDAQ: AAPL) is scheduled to report first quarter 2016 earnings after the close tonight. Earnings are expected at 4:30PM ET with a conference call to follow at 5PM ET.

Analysts on average are expecting the company to report EPS of $3.23 of revenue of $76.59 billion, representing year-over-year growth of 5.6% and 2.7%, respectively. The Street is looking for margins of around 40% and iPhone sales of 74-75 million units.

March quarter guidance will be key. Numbers on the Street have been moving lower into the results as many see slowing iPhone sales based on supply chain checks and weak financial performance from a number of key suppliers. Bernstein analyst Toni Sacconaghi noted that at least 10 major Apple supply chain partners have commented on seeing current quarter weakness, with several pointing to a slowdown towards the end of the quarter.

The Street is now calling for revenues of $55.64 billion and EPS of $2.23 in Q216. Both would represent a year-over-year decline for Apple. However many on the Street see these numbers as still too high. Sacconaghi, for example, sees revenue of $51.8 billion EPS of $1.98.

Downside is clearly expected by the Street. The main question is - how much downside is now priced in?

Probably a lot. That said, Sacconaghi sees near term risks as threefold: (1) implied iPhone unit growth in FY 16 is much worse than expected (worse than -15%); (2) Apple builds material channel inventory (i.e., >22M units vs. what might be a more normal levels of about 19 - 20M); and (3) gross margins deteriorate materially. The analyst said each would like cause uncertainty about where estimates might go, and could cause further near-term pressure in the stock.

Overall, Sacconaghi said the iPhone business is fundamentally healthy, and they would look to be adding to positions at current levels, though looking to not buy a full position prior to the quarter.

Shares of Apple are up 0.64% to $100.07 in afternoon trading.