The A2 Milk (ASX:A2M) share price is at a 3-year low and could go lower

The A2 Milk Company Ltd (ASX: A2M) share price has been out of form once again this week.

This has led to the fresh milk and infant formula company's shares dropping to a three-year low of $8.31.

Why is the a2 Milk share price at a three-year low?

There are a number of reasons why the a2 Milk share price is now trading at a multi-year low.

This includes heavy insider selling last year, sustained weakness in the daigou channel, and a series of guidance downgrades by management.

The most recent downgrade came last month when a2 Milk released its disappointing half year results.

For the six months ended 31 December, the company recorded a 16% decline in revenue to NZ$677.4 million and a 32.2% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$178.5 million.

Unfortunately, things are not expected to get much better in the second half after management once again incorrectly estimated the pace of recovery in the daigou and CBEC channels.

It is now forecasting FY 2021 revenue of ~NZ$1.4 billion with an EBITDA margin of 24% to 26% (excluding acquisition costs). This compares to its previously downgraded guidance range of NZ$1.4 billion to NZ$1.55 billion with an EBITDA margin of 26% to 29%.

This will mean a 19.1% year on year decline in revenue and a 26.7% decline in EBITDA, based on the low end of its guidance range.

What else is weighing on its shares?

Also weighing on the a2 Milk share price has been the reaction to its results and outlook from brokers.

After being a market darling for years, brokers have become increasingly mixed on its prospects.

This is particularly the case over at Citi. This week the broker retained its sell rating and $7.15 price target on the company's shares.

As well as difficulties in the daigou channel, the broker has concerns over increasing competition in the China market from domestic producers.

So, although the a2 Milk share price is trading at a multi-year low, Citi appears to believe it could still fall a further 14% from here.