What happened

Shares of enterprise cybersecurity specialist Fortinet (FTNT 0.69%) crashed on Friday. The stock fell as much as 9.5% in the morning session before climbing back to a milder 7.2% drop at 2:20 p.m. EDT. The sharp downturn stood in stark contrast to the third-quarter earnings report Fortinet posted on Thursday night, beating Wall Street's estimates and following up with rosy guidance for the next quarter.

So what

Fortinet's total third-quarter revenue rose 19% year over year to $651 million, led by a 22% increase in service sales. Adjusted earnings landed at $0.88 per diluted share, 31% above the year-ago period's result. Your average Wall Street analyst would have settled for earnings near $0.78 per share on revenue of approximately $639 million.

Looking ahead to the fourth quarter, Fortinet's management expects earnings to rise 26%, landing near $0.96 per share. Sales should stop in the vicinity of $720 million. Here, the current analyst consensus pointed to earnings of roughly $0.87 per share on sales near $708 million.

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Image source: Getty Images.

Now what

The report was followed by a plethora of bullish analyst reactions, including at least four that reiterated "buy" ratings with raised price targets. That didn't stop Fortinet's stock from sliding on a brutal day for the broader market. The S&P 500 index fell as much as 2% on Friday, spooked by several disappointing earnings reports from companies not named Fortinet plus a rising second wave of COVID-19 infections. The tech sector took the same market news much harder, driving the NASDAQ-100 index as much as 3.2% lower.

Fortinet's strong gains over the last year set the stock up for a quick correction today, even though its results were fantastic and the next-quarter guidance supplied another rosy surprise. The stock is still up by a market-stomping 43% over the last 52 weeks, trading at a lofty 36 times trailing earnings. Volatility comes with the territory for high-flying market darlings.

You can still invest in Fortinet with confidence. Just remember that the COVID-19 pandemic that is hurting many companies today actually drives higher demand for Fortinet's digital security products and services.

"The COVID-19 pandemic has accelerated digital transformation and organizations have to deal with new challenges to secure the whole infrastructure in the zero-trust environment," Fortinet CEO Ken Xie said in the company's earnings call. "Fortinet is helping customers solve these issues through security-driven networking and our platform approach."