Wall Street was not impressed. Alcoa's shares closed down almost 2$ Thursday and were down a further 1% Friday.
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However, Alcoa remains a great long-term investment. At $17, shares are up 57% for the year to date, outpacing the 7.75% gain in the S&P 500, according to CNN Money. These shares, which are less than 3% away from a new 52-week high, should reach $20 in the next 18 to 24 months.
Already called the largest deal ever between the two companies, Alcoa will supply Boeing with aluminum sheet and plates to be used in Boeing jets. As Alcoa puts it, this deal "establishes a foundation for continued collaboration" on new alloys, including aluminum-lithium.
Dennis Muilenburg, Boeing's chief financial officer, said the deal with Alcoa was part of Boeing's broader "partnering for success." It's an initiative aimed to help Boeing secure better costs from its regular suppliers.
For Alcoa, which has always had ambitions of growing in the aerospace industry, this deal with Boeing makes sense, especially on the heels of the company's $3 billion acquisition of Firth Rixson, a U.K.-based maker of jet-engine components. Wall Street just hasn't had time to digest it yet.
The deal exposes Alcoa to opportunities in higher-margin products. Given the extent to which global aluminum pricing have been under pressure due to commoditization, entering the high-growth air space to supply with Boeing with alloy components will have long-term growth effects.