Last Update 09 Dec 25

YUBICO: Wider Retail Access Will Drive Future Demand Despite Recent Downgrade

Analysts trimmed their price target on Yubico to $124.67 from $124.67, a marginal adjustment that reflects slightly higher perceived risk and a more cautious stance following recent downgrades to Hold.

Analyst Commentary

Analysts describe the latest downgrade as a shift toward a more balanced risk reward profile, with the new Hold rating signaling tempered expectations for near term outperformance rather than a structural change in the company thesis.

Bullish analysts continue to highlight Yubico's strategic positioning in hardware based security and its exposure to long term digital identity and authentication trends, but acknowledge that near term execution and valuation constraints justify a more patient stance.

Bullish Takeaways

Bullish analysts see Yubico as well positioned to benefit from growing regulatory and enterprise focus on phishing resistant authentication. They view this as supporting a durable medium term growth runway.
They note that the downgrade is driven more by near term risk recalibration than by deterioration in fundamentals, suggesting that core demand drivers and product relevance remain intact.
Some still view the valuation as reasonable relative to longer term growth potential, assuming Yubico can maintain its innovation pace and expand its customer footprint in large enterprises and public sector accounts.
There is confidence that continued adoption of passwordless security frameworks could provide upside to current growth assumptions over a multi year horizon.

Bearish Takeaways

Bearish analysts argue that the current valuation already discounts a robust adoption curve. They see limited margin for error if large enterprise rollouts or public sector contracts are delayed.
They highlight execution risk around scaling distribution and support globally, noting that any missteps could pressure growth rates and profitability relative to prior expectations.
There is concern that competitive dynamics in security and authentication, including software based alternatives, could cap pricing power and compress future margin expansion.
Some caution that macro driven budget scrutiny at large customers may slow near term deal cycles, making it harder for Yubico to consistently beat growth forecasts that are already embedded in the stock.

What's in the News

Yubico expands retail presence by bringing YubiKeys to 350 Best Buy stores across the US. This marks its first large scale brick and mortar rollout and broadens consumer access to hardware security keys (Key Developments).
Partnership with Best Buy Foundation extends security education to youth via Secure it Forward. The initiative provides free YubiKeys, training guides, and hands on resources to Best Buy Teen Tech Centers to help teens protect their digital identities (Key Developments).
Dashlane partners with Yubico to enable phishing resistant, passwordless login to Dashlane vaults using YubiKeys and WebAuthn PRF, positioning hardware keys as the primary method for vault access and encryption (Key Developments).
Dashlane and Yubico begin developing a Yubico SDK to extend security key PRF support from web to mobile, with the goal of creating a cross platform framework that scales passwordless protection to more devices (Key Developments).
Yubico appoints Snejana Koleva as CFO, adding new financial leadership as the company scales partnerships and retail distribution (Key Developments).

Valuation Changes

Fair Value: Unchanged at approximately SEK 124.67 per share, indicating no material shift in the central valuation estimate.
Discount Rate: Risen slightly from about 6.39 percent to roughly 6.45 percent, reflecting a modest increase in perceived risk or required return.
Revenue Growth: Essentially unchanged at around 15.13 percent, signaling stable expectations for top line expansion.
Net Profit Margin: Stable at approximately 17.08 percent, suggesting no meaningful revision to long term profitability assumptions.
Future P/E: Increased marginally from about 21.61 times to roughly 21.65 times, implying a slightly higher multiple on expected earnings.

Transition to subscription-based sales and broader identity solutions positions Yubico for stronger margins, recurring revenue, and increased customer retention.
Escalating demand from regulation and cyber threats, combined with early penetration in large enterprises, provides a runway for sustained market and earnings growth.
Growing competition, technological shifts away from hardware, and external macroeconomic pressures threaten Yubico's revenue, profitability, and long-term market relevance.

Catalysts

About Yubico

Provides authentication solutions for use in computers, networks, and online services.What are the underlying business or industry changes driving this perspective?

The shift toward subscription-based sales (YubiKey-as-a-Service) is accelerating, particularly with large enterprise customers in the US and technology sectors, positioning Yubico for higher long-term revenue stability and margin expansion as recurring ARR flows through the P&L over coming years-even as this transition temporarily pressures reported sales and earnings.
Increasing regulatory pressure and escalating cyber threats are driving more enterprises and public sector organizations globally toward adopting stronger authentication solutions, increasing the addressable market for Yubico's differentiated hardware-backed MFA products and setting the stage for sustained future revenue and market share growth.
The company's "land and expand" strategy with large Global 2000 customers is still in early penetration phases (with most customers using YubiKeys for only a subset of users), providing a significant embedded runway for multi-year upsell and repeat orders, bolstering future top-line growth and earnings visibility.
Expansion of Yubico's offering-moving from login-only protection to broader user-centric identity solutions (including potential M&A in ID verification)-can capture more of the growing market for secure digital identity, leading to higher ASPs, better customer retention, and improved gross margin over time.
High gross margin (near 80% on product sales) combined with operational leverage from improved global distribution and channel partner programs will enable margin expansion as Yubico scales, supporting stronger long-term earnings growth as revenue accelerates with global digital transformation.

Yubico Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Yubico's revenue will grow by 14.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.9% today to 16.5% in 3 years time.
Analysts expect earnings to reach SEK 581.1 million (and earnings per share of SEK 5.57) by about September 2028, up from SEK 254.5 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as SEK418.4 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.1x on those 2028 earnings, down from 45.2x today. This future PE is lower than the current PE for the SE Software industry at 35.2x.
Analysts expect the number of shares outstanding to grow by 0.36% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.41%, as per the Simply Wall St company report.

Yubico Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Yubico's continuing reliance on hardware-based authentication solutions faces long-term risk from increasing adoption of biometric authentication and native operating system passkey implementations, which could gradually decrease the relevance and demand for physical keys-putting long-term pressure on core product revenues.
The company's current high gross margins are sensitive to both sales volume and product mix; short-term declines in perpetual hardware sales as the business pivots towards subscription models are already resulting in lower net sales and EBIT, and persistent negative sales growth during the transition could reduce profitability and dampen investor sentiment.
Intensifying competition from both incumbent smartcard vendors and new entrants pushing integrated passkey and software-first authentication tools may challenge Yubico's market share and pricing power, especially as enterprises increasingly evaluate bundled or cloud-native authentication solutions-threatening gross margin and future earnings growth.
Foreign exchange volatility, particularly the impact of a strong Swedish krona against the US dollar (with over 80% of revenue in USD/euro), is placing downward pressure on reported top-line and margins, and continued currency headwinds could further erode reported revenues and profits over the long term.
Exposure to US import tariffs (on hardware manufactured in Sweden and shipped to the US) is increasing Yubico's cost of goods sold by 1–1.5 percentage points, with possible further escalation; if Yubico cannot pass these costs on to customers, this could structurally impair gross margins and long-term profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SEK155.75 for Yubico based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK190.0, and the most bearish reporting a price target of just SEK130.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK3.5 billion, earnings will come to SEK581.1 million, and it would be trading on a PE ratio of 28.1x, assuming you use a discount rate of 6.4%.
Given the current share price of SEK133.0, the analyst price target of SEK155.75 is 14.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Yubico?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Subscription Transition And Cybersecurity Demand Will Define Future Market Position