diff --git a/libfdt/fdt_overlay.c b/libfdt/fdt_overlay.c
index 7fbf58c..be71873 100644
--- a/libfdt/fdt_overlay.c
+++ b/libfdt/fdt_overlay.c
@@ -738,8 +738,11 @@ static int overlay_symbol_update(void *fdt, void *fdto)
 
 		/* get fragment name first */
 		s = strchr(path + 1, '/');
-		if (!s)
-			return -FDT_ERR_BADOVERLAY;
+		if (!s) {
+			/* Symbol refers to something that won't end
+			 * up in the target tree */
+			continue;
+		}
 
 		frag_name = path + 1;
 		frag_name_len = s - path - 1;
@@ -756,7 +759,9 @@ static int overlay_symbol_update(void *fdt, void *fdto)
 			rel_path = "";
 			rel_path_len = 0;
 		} else {
-			return -FDT_ERR_BADOVERLAY;
+			/* Symbol refers to something that won't end
+			 * up in the target tree */
+			continue;
 		}
 
 		/* find the fragment index in which the symbol lies */
diff --git a/tests/stacked_overlay_addlabel.dts b/tests/stacked_overlay_addlabel.dts
index e5c158f..e7187a3 100644
--- a/tests/stacked_overlay_addlabel.dts
+++ b/tests/stacked_overlay_addlabel.dts
@@ -1,8 +1,10 @@
 /dts-v1/;
 /plugin/;
 / {
-	fragment@1 {
+	frag1: fragment@1 {
 		target-path = "/foonode";
+		local: localinfo {
+		};
 		foo: __overlay__ {
 			overlay-1-property;
 			bar: barnode {