Morgan Stanley has a new favorite pick in the chip space

A Broadcom chip
David Paul Morris | Bloomberg | Getty Images

Concerns about Broadcom's recent acquisition of Symantec's enterprise software business are overblown and the stock is a compelling buying opportunity, Morgan Stanley told its clients on Tuesday.

Lead equity analyst Craig Hettenbach upgraded the stock to overweight from equal-weight and bumped his 12-month price target to $367 from $298, implying nearly 18% upside over the next year. Broadcom stock rose 2% in premarket trading Tuesday following the Morgan Stanley upgrade. Hettenbach calls it "our new top pick."

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