With Apple refreshing its entire product line in a little under two months towards the end of 2012, CEO Tim Cook warned that gross margins would go down, then move back up through the rest of the year. J.P. Morgan analyst Mark Moskowitz believes Apple can achieve 39.3% in gross margins this quarter, which would bode well for earnings. "For Apple, we believe much of investor anxiety has been related to the potential movement of gross margin over time," he wrote, in a note. "As discussed previously, if Apple is able to improve corporate gross margin closer to the 40% threshold, then we believe the Apple story can come back into favor. Our gross margin estimates for Dec-Q and F2013 are now 39.3% and 40.6%, versus 38.7% and 40.3% previously." Moskowitz rates Apple "overweight" with a $725 price target. Margins really are the key to the report, as well as forward guidance, said one hedge fund analyst who declined to be named. "If they guide weak on margins, no EPS number will be good enough because everyone is so worried about the future that the recent past loses its relevance." Capital Advisors Growth Fund portfolio manager Channing Smith has his concerns over Apple, particularly regarding gross margins. "We expect overall gross margins to come in slightly under 40% and the coming quarters gross margins to trend to the low 40% range," Smith said in an email. He believes Apple could sell 50 million iPhones and 22 million iPads in its fiscal first quarter, but does have some concerns about Apple. "We are for the first time in years somewhat nervous about the report as there were uncertainties out there during the quarter that are hard to handicap," he said. Forward guidance, always a curveball with Apple, will be more heavily scrutinized this quarter than most. Apple tends to under-promise and over-deliver (UPOD) on guidance, so its outlook should always be taken with a grain of salt. BMO Capital Markets analyst Keith Bachman believes guidance could be disappointing, with Apple guiding sales between $40 billion and $42 billion for the March quarter. "In years past, investors have bought disappointing guidance and usually have been rewarded over time. However, with such negative sentiment surrounding the stock, we do not think investors will use conservative guidance to buy the stock in the near term," Bachman wrote, in his note. As long as Apple comes in close to the Wall Street consensus, this could very well alleviate concerns about the company, for at least a little while. Analysts polled by Thomson Reuters are looking for $45.38 billion in sales, earning $11.67 a share for the March quarter.