Jefferies on Wednesday raised its price target on Apple Inc. shares to $130 from $124 and said it expects iPhone demand in China to drive a 10% per-share earnings beat in the second fiscal quarter. "Our analysis based on Counterpoint data suggest 53% of iPhone shipment growth YoY in FQ1 was driven by China," analysts wrote in a note. The brokerage is expecting Apple to use its cash flow to raise dividends by 5% to 10% and to enact share buybacks that will reduce sharecount by 5%. However, Jefferies is expecting iPhone sales growth to decelerate starting in the third fiscal quarter, mostly due to increased competition from Samsung's Galaxy Note 4/Edge and S6/Edge, "which appear to be receiving positive feedback from customers, particularly in the U.S., following a period of product misexecution from Samsung," said the note. Apple shares were slightly higher in premarket trade, but have gained 13% in the last three months, while the S&P 500 has gained 0.6%.
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