Fortinet Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of network and data security expert Fortinet (Nasdaq: FTNT  ) jumped as much as 12.4% overnight on massive volume.

So what: Fortinet's third-quarter results crushed management's timid guidance and Street estimates with ease, including a surprise 37% year-over-year revenue jump. The performance comes on the heels of a very strong Monday session; Fortinet's shares have obliterated the market with a 20% gain this week.

Now what: The revenue gains were pretty evenly divided between new hardware sales and support contracts, which is exactly how Fortinet likes it. Over time, the growing base of installed systems should lead to dramatically higher support revenues in the same razor-and-blades model that makes so much money for robotic surgery veteran Intuitive Surgical (Nasdaq: ISRG  ) . Only F5 Networks (Nasdaq: FFIV  ) among Fortinet's many competitors can match this company's combination of fat margins and speedy sales growth, leaving chief competitors Cisco Systems (Nasdaq: CSCO  ) and Juniper Networks (Nasdaq: JNPR  ) far behind. The stock may look a little pricey, but sometimes you get exactly what you pay for -- in this case, a well-managed company with terrific growth prospects.

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