Investors should buy the recent dip in Netflix shares due to its dominant position in the streaming video market, according to RBC Capital Markets.

The firm raised it price target for Netflix shares to $440 from $360, representing 29 percent upside to Wednesday's close. RBC also reiterated its outperform rating for the stock, citing positive results from the firm's recent consumer survey.

"We believe these results largely confirm Netflix's strong Value Prop and Competitive Position," analyst Mark Mahaney said in the note to clients Wednesday. "We also view Netflix as one of the best derivatives off the strong growth in online video viewing and in Internet connected devices (tablets, smartphones, Internet TVs), with our proprietary survey data tracking significantly improved customer satisfaction levels."

Netflix shares closed up 1.6 percent Thursday. The stock dropped 6.2 percent on Wednesday after the shares failed to hold a key technical level and as part of a bigger sell-off in technology shares. A favorable report from Morgan Stanley on Apple's Netflix-competitor video service may have also contributed to the decline.

The analyst said the firm's recent survey of more than 1,500 U.S. consumers showed 68 percent of Netflix subscribers are either "extremely" or "very satisfied" with its service. It also revealed 57 percent of respondents use the service up from 53 percent in September's survey.

"We believe that Netflix has achieved a level of sustainable scale, growth, and profitability that isn't currently reflected in its stock price," he said.

In its second-quarter financial results, the company said it added 5.15 million memberships, missing the Wall Street consensus of 6.34 million. Netflix shares are down 13 percent since the end of June because of that miss and the decline on Wednesday.

— CNBC's Michael Bloom contributed to this story.