Southwest Airlines could be next on Warren Buffett's shopping list, according to Morgan Stanley.

"Investors have flirted with a BRK-LUV combination for some time. Our screen for potential airline acquisitions by BRK suggests LUV would be a good strategic fit," Morgan Stanley analysts Kai Pan and Rajeev Lalwani said in a joint note entitled "Should BRK Show More LUV?" Tuesday. "We have no knowledge of any M&A discussions and the airlines have not commented. That said, our screen of potential airline acquisitions by Berkshire suggests Southwest could fit well into Berkshire's family given its acquisition criteria, ownership of capital-intensive businesses, and deployable $100b+ cash balance."

Southwest shares closed up 1.3 percent Wednesday after the report.

The analysts cited Buffett's acquisition criteria of large size, "consistent earnings power," not much debt, good current management, "simple" business model and attractive price.

"Berkshire focuses on quality of business and management in acquisition, which could make for an obvious pairing [with Southwest]," they said. "While we recognize that other factors could come under consideration, our screen suggests Southwest as a hypothetical candidate for a more permanent relationship with Berkshire."

Berkshire Hathaway already has a large stake of around $2.8 billion in Southwest Airlines, according to FactSet using the latest March 13F filing holdings data. Buffett's company also owns positions in Delta Air Lines, American Airlines and United Continental.

The analysts noted Southwest is similar to Berkshire's insurance company GEICO as an industry leader with "significant competitive advantage" and low cost structure.

They said Berkshire could bid $70 to $80 per share for Southwest, citing historical market premiums the company has paid for its acquisitions. The midpoint of that price range represents 29 percent upside to Tuesday's stock price close.

Morgan Stanley currently has an overweight rating and $67 price target for Southwest shares.

Southwest Airlines declined to comment. Berkshire Hathaway did not immediately respond to a request for comment.