Why GlaxoSmithKline plc, Babcock International Group PLC and John Menzies plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) fell back today, losing 21 points to 6,707 by early afternoon, after Chinese jitters had an impact on the big London-listed miners. But at least the improving economic situation in the US is starting to be seen for what it really is — good news, rather than just a gloomy precedent for the end of quantitative easing.

A couple of disappointing updates from FTSE 100 companies also contributed to the sluggish day today. Here are three that fell:


GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) shares fell 20p (1.2%) to 1,630p after a disappointing Phase III trial. The firm’s Lp-PLA2 inhibitor darapladib, a candidate for the treatment of coronary heart disease in combination with a cholesterol-lowering statin, did not show any sign of lowering the risk of heart attack or stroke when compared to a placebo.

But according to R&D president Patrick Vallance, Glaxo will “continue to investigate the role of Lp-PLA2 inhibition in coronary heart disease and other diseases“.

Glaxo shares are up around 19% over the past 12 months, just a shade ahead of the FTSE but with a better dividend return.

Babcock International

Despite reporting “strong businesses and significant bid pipelineat its halfway stage, Babcock International Group saw its share price dip by 11p (1%) to 1,280p.

For the six months to 30 September, the engineering services firm enjoyed a 9% rise in underlying revenue to £1,701m, with underlying pre-tax profit up 17% to £141.7m and earnings per share up 13% to 31.6p. Net debt fell from £581m to £572m, and the interim dividend was raised 9.5% to 6.9p per share.

John Menzies

A profit warning sent John Menzies (LSE: MNZS) shares down 58p (7.1%) to 761p, after the firm told us of poor trading conditions at its Menzies Distribution division. Weaker-than-expected sales of magazines and newspapers are now “expected to impact the second half result“, suggesting the current consensus for a full-year fall in earnings per share of around 6% is understated.

But at least Menzies Aviation is performing well, and its “overall outlook remains positive“.

The shares had been up more than 40% before today’s drop, after a steady rise since the summer.

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> Alan does not own any shares mentioned in this article. The Motley Fool has recommended shares in GlaxoSmithKline.