Mark Mahaney: Why Netflix is my top FANG pick

The market is underestimating the universal appeal of Netflix, which is now the most "on sale" high-quality large-cap internet stock, analyst Mark Mahaney said Wednesday.

"That's probably the most dislocated of the FANG stocks," he told CNBC's "Squawk Box," referring to Facebook, Amazon, Netflix and Google parent Alphabet.

Shares of Netflix are down more than 14 percent this year and trailing the performance of other FANG stocks.

"Netflix was the big correction stock because they disappointed people on international" subscriptions guidance, said Mahaney, lead tech analyst at RBC Capital Markets.

But he cited a recent RBC survey that found Netflix has penetrated 15 percent of broadband households in France and Germany. According to RBC, Netflix has ramped up its business in those countries more quickly than it did following prior launches in the U.K., the Netherlands and Scandinavian countries.

In a research note, Mahaney said concerns about the model's profitability and competition are also overstated. He reiterated his call that shares of Netflix can double in price in the next three years.

"This is a service with a price point, with the content, the value, the functionality, et cetera, that's universal in appeal. People underappreciate that," he said.

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