Time is ticking for Apple to announce an iWatch, say analysts

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Apple needs an iWatch sooner rather than later, or the company will risk losing its innovative edge to rivals, analysts say.

"They only have 60 days left to either come up with something or they will disappear," said Trip Chowdhry, managing director at Global Equities Research.

"It will take years for Apple's $130 billion in cash to vanish, but it will become an irrelevant company ... it will become a zombie, if they don't come up with an iWatch."

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In addition to its innovative edge, Apple risks missing the huge opportunity that exists in the fast-growing wearable space if it doesn't come out with something soon, said Chowdhry. He nevertheless has an "overweight" rating on the stock, and an $800 price target.

While Chowdhry's prediction may be at the extreme end, other analysts echo his sentiment. And there's no doubt that the wearable space is suddenly getting crowded.

Activity trackers like FitBit and Jawbone are consumer favorites, and Google announced on Tuesday that its smartwatch partner Motorola will launch a watch as early as this summer.

"The pressure comes from companies like FitBit and Jawbone. ... These companies are making these devices and building an ecosystem around these wearables and Apple should certainly want to play in that," said Rob Cihra, a senior tech analyst at Evercore Partners.

(Read more: Motorola to launch first smartwatch, powered by Google)

There's no shortage of speculation about what an iWatch will do—or when it will come out—but until Apple makes it official, the device is still completely hypothetical. Still, analysts who cover the company seem fairly certain that the company will debut a wearable product in 2014, particularly because wearables would be a natural fit for Apple's ecosystem.

"Everyone is expecting Apple to come out with something this year. For one thing, it seems like a natural extension of the iOS ecosystem. It's not a big stretch to think that it's something they should be tapping into," said Cihra, who also has an "overweight" rating on the stock and a price target of $670.

"Wearables need innovation and creativity and some direction, and people look to Apple to do that sort of thing," Cihra added.

Carolina Milanesi, chief of research at Kantar WorldPanel, said Apple's Worldwide Developers Conference would be an ideal time to introduce a device, as it would excite developers and enable the company to mass-market a product before the holiday season.

"There's a lot going on in the wearable space, but I think for Apple the pressure is to get it right," Milanesi said. "It's not so much getting in quickly, it's getting in there the right way. ... It's not in Apple's style to rush things, especially when its part of the bigger picture."

That doesn't mean Apple can wait forever to enter the wearable space, though.

If Apple doesn't launch a wearable device this year, it's going to have to showcase something "amazing" early next year, Milanesi said.

"The reason there is so much anticipation is because there's a real hope that Apple is going to show us the way, there's a hope that they will be able to do more than FitBit or Jawbone," Cihra said. "I don't know if Apple has been first into a market at all. They often go into a market after somebody has already started in it."

"They probably shouldn't wait too long, though," he added.

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