01:32 PM EDT, 04/09/2024 (MT Newswires) -- US gaming stocks are currently trading at discounts amid concerns over consumer spending and other factors, Morgan Stanley said in a report Tuesday.

The firm said it is maintaining a selective stance in the sector and still prefer Las Vegas Sands ( LVS ) and DraftKings ( DKNG ) , as it favors areas with tailwinds such as online sports betting.

"Softer domestic data points outside of Vegas have made it more difficult to find high conviction across gaming," it said.

According to Morgan Stanley, MGM Resorts International ( MGM ) and Wynn Resorts ( WYNN ) are the stocks with the most notable discounts, "reflecting a combination of geopolitical concerns in China, rising rates in the US, and increasing pressures over what could be a broader consumer slowdown."

"While some investors are looking for a 'new cycle' to re-accelerate trends, we do not see an inflection for Gaming given already lagging fundamentals [versus] macro," it said.

Price: 52.21, Change: -0.23, Percent Change: -0.45