Why investors should look past Apple's 'horrendous' earnings

Adam Jeffery | CNBC

Tempered expectations for Apple this earnings season, along with a new product cycle on the horizon, may be just what the company needs to get its stock moving higher, analysts say.

(Read more: One bad Apple: Tech earnings to shrink, and Apple's to blame)

The tech titan will be reporting its third-quarter numbers next Tuesday. It is expected to have a repeat of its second quarter and again post a year-over-year decline in earnings. Revenue may fall flat, too.

(Read more: Earnings reports could stop tech surge in its tracks)

"Even if the quarter is horrendous and the outlook is bad—and it's hard not to see the worst—we are in a period where you have to be forgiving," said Brian White, a senior analyst for Topeka Capital Markets. "People have been unforgiving, but we have to be forgiving because you are going to have a new product cycle that starts and when they give guidance they won't put that in, they don't want to tell, they don't want to reveal too much."

The average projection for the third quarter is per-share earnings of $7.31 on revenue of $35.09 billion, according to a poll by Thomson Reuters. Apple's forecast for its revenue is in the $33.5 billion to $35.5 billion range, which would be on par or below the $35 billion the company reported in the same quarter a year ago.

Weaker iPhone sales are the primary reason behind Apple's slowing growth, but the profit cycle decline should hit a bottom this quarter, according to White.

"The way I look at Apple ... the high-end smartphone market has hit a wall," he said. "They have essentially one phone that they put out a refresh of every year and it caters to the high end of the market and they can't grow anymore because that market is fully penetrated. ... Apple, as well as investors, did not see this wall."

Apple reported second-quarter earnings of $10.09 a share on revenue of $43.60 billion, versus $12.30 a share on $39.19 billion a year earlier. It was the company's first profit decline in a decade.

And while numbers for the third quarter aren't expected to be any better, perhaps the tempered expectations and new-product plans will finally help the stock get a boost, Adam Hewison, president and chief strategist at INO, told CNBC's "Capital Connection" on Thursday.

"Apple could be the stealth leader for the second half of the year," Hewison said. "Apple got hammered at $700 simply because people's expectations were for a $1,000 for Apple. ... Our trigger point on Apple is really $466. If you go with $466, you can get to $560 in a very short period of time."

The stock was trading at about $430 early Thursday, down about 20 percent from a year ago. (For the latest stock price click here.)

But the company has some "strategies" that it will implement later this year that will push its stock price higher, Hewison said. Though no one knows exactly what they will be, he said Apple will likely roll out TV technology, an iWatch and even technology for smart cars.

(Read more: Why Apple is still the king of design and innovation)

The company also has its next-generation iPhone—the iPhone 5S—coming out this fall, as well as a low-cost iPhone, which will be priced at $250 to $300 and geared toward expanding Apple's international smartphone market share, White said. He has a buy rating on the stock with a price target of $888.

"Apple still has a long way to go in mobile market share" and, as the smartphone market becomes saturated, "the next major market for Apple is wearable electronics," he said. "With all the investment Apple has put into the technology, how are competitors going to be able to touch them?"

White said that regardless of how bad Apple's earnings and guidance are, it's important to look beyond the numbers and at the bigger picture of where the company is in terms of its development cycle.

"Apple is going to have a tough quarter and tough outlook, but at this point ... it's a little shortsighted to get concerned about what we are going to see in the quarter and outlook," White said. "We are tapping into totally new markets. A TV for Apple is a totally new market; wearable electronics, an iWatch, is a totally new market."

—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.