A2 Milk (ASX:A2M) share price falls 3% to 3-month low

The A2 Milk share price is out of form again…

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The A2 Milk Company Ltd (ASX: A2M) share price is trading lower again on Friday.

In afternoon trade, the struggling infant formula company's shares are down almost 3% to a three-month low of $5.40.

This means A2 Milk's shares are down approximately 54% since the start of the year.

Why is the A2 Milk share price dropping again today?

Today's weakness in the A2 Milk share price appears to have been driven by souring relations between Australia and China. This follows yesterday's news that Australia, the UK, and the United States have formed the AUKUS alliance.

It isn't just A2 Milk that is falling today in response to these concerns. Health supplements company Blackmores Limited (ASX: BKL) is also down by a similar margin this afternoon. It generates meaningful revenues from the China market.

And while it is worth noting that A2 Milk is a New Zealand based company, investors appear to be overlooking this due to its close ties to Australia and Australian based daigou shoppers.

What else is weighing on its shares?

The main drag on the A2 Milk share price this year has been its operating performance.

Countless downgrades, huge inventory write-offs, and a weak outlook have all had investors running to the exits.

However, one potential positive for the A2 Milk share price is that it has now dropped in line with the price target of the most bearish major broker.

According to a note out Macquarie Group Ltd (ASX: MQG) from late last month, its analysts put an underperform rating and $5.40 price target on the company's shares.

Shareholders will no doubt be hoping that this represents the bottom for its shares. Though, whether that is the case or not, could depend largely on its annual general meeting update in November.

A much-improved performance could give its shares a boost. And vice versa if its performance has continued to deteriorate.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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