Analysts are quickly turning more optimistic on Tesla Inc. shares as a long-awaited combination with SpaceX moves closer to becoming a reality.

Tesla stock jumped 5.2% on Monday.

The portion of bearish ratings on the stock has fallen to its lowest level in more than 11 years. Analysts at BNP Paribas and CLSA dropped their sell-equivalent recommendations last week, upgrading their ratings to neutral and hold, respectively. Barclays followed on Monday, raising the stock to a buy equivalent from one equating to hold. Tesla shares climbed 5.2% on Monday.

"The anticipated merger is now a key part of the Tesla bull case, as it provides upside potential to the stock," Barclays analyst Dan Levy wrote in a note.

Merger enthusiasm peaked Tuesday evening after Elon Musk said Tesla and SpaceX's boards formed special committees to study the benefits of a deal. Wall Street has been focused on the potential for a tie-up between Musk's largest firms since before SpaceX went public in June.

The potential tie-up is now an "overriding valuation concern," BNP's James Picariello said in a note, despite his ongoing caution toward Tesla's cash burn and the pace of its progress with AI. Picariello boosted his price target to $420 from $266 "exclusively" reflecting the higher possibility of SpaceX acquiring Tesla.

"If a merger is to be approved, the independent special committees for both companies will need to negotiate a deal that makes sense," Andrew Rocco, strategist at Zacks Investment Research, wrote in a note. "Assuming a 25% premium, Tesla shares would be worth around $500."

Only five out of 60 analysts tracked by Bloomberg recommend selling Tesla shares — marking the lowest percentage of bearish calls since early 2015. That compares to 15 sell ratings out of 71 analysts back on Jan. 1, data showed.

Even as the proportion of sell ratings has dwindled this year, bullish calls have remained relatively steady. Tesla shares, meanwhile, have dropped 13% year-to-date while the S&P 500 Inc. jumped 12%.

Tesla has ambitious goals but a track record of late execution, leaving investors and analysts uncertain about when and if its AI plans will pay off. Even without the merger, Tesla's business has been at an inflection point as Musk attempts to transform the company from an EV manufacturer to a vanguard of physical AI with self-driving robotaxis and robot assistants.

SpaceX, which is also charging into AI, subsumed Musk's xAI earlier this year and is already collaborating with Tesla on the Terafab chip manufacturer project and special engineering products like the gravity-defying Roadster. A combination could create a $3.6 trillion AI conglomerate under Musk's hand.

Last week, Tesla reported third-quarter profit that topped expectations, but its stock wavered on a lowered annual spending forecast for 2026 as investors questioned whether the company is spending enough cash to reach its goals.

Still, Barclays analyst Levy said that the report delivered "a number of key positives that can support strength for the stock," referring to Tesla's core car business and robotaxi segment.