PENN Entertainment's (PENN) Q2 results reflected mixed industry trends, though stronger regional gaming helped the operator beat expectations and appear to gain share, Morgan Stanley said Wednesday in a report.

Regional gaming accelerated in Q2 while Las Vegas and Macau remained choppy. Morgan Stanley said. PENN, Wynn Resorts (WYNN), Boyd Gaming (BYD) and Red Rock Resorts (RRR) all posted Q2 beats, the report said.

Morgan Stanley raised its regional gaming estimates and generally lowered its Las Vegas forecasts following the results. July trends stayed positive despite even as tax-refund tailwinds faded, the report said.

Gaming stocks sold off broadly despite earnings beats as investors questioned demand resilience and higher interest rates, Morgan Stanley said. Improved risk-adjusted returns and potential opportunities in prediction markets and online sports betting offer upside, the report said,

Morgan Stanley raised its price target on PENN stock to $20 from $19 and maintained its equal-weight rating.

Price: 19.15, Change: +0.02, Percent Change: +0.10