International Business Machines (IBM) is aiming to become the platform leader in quantum computing, supported by what BofA Securities calls "one of the most fundamental leadership-driven repositionings" in the company's modern history under CEO Arvind Krishna and CFO James Kavanaugh.

The brokerage said in a note Wednesday that IBM has set the "most ambitious" strategy in fault-tolerant quantum computing and aims to deliver a large-scale, fault-tolerant quantum computer by 2029.

The company is also on track to generate about $13.5 billion in free cash flow this year, supported by a shift in its business mix over the past five years toward hybrid cloud, AI, and strategic software acquisitions.

Cost efficiency programs, including real estate consolidation, workforce optimization, and increased automation through AI copilots in service delivery, have also contributed to margin improvement, BofA said.

While BofA sees IBM as well-positioned to achieve mid-single-digit revenue growth longer term, the firm said IBM may face difficulty hitting its targets given its exposure to slower-growth businesses.

IBM could also face competitive pressure from companies such as ServiceNow (NOW) and Salesforce (CRM) in enterprise AI, where peers offer more advanced capabilities, according to the note.

BofA raised its price target on IBM to $320 from $290 and reiterated a buy rating.

Price: 285.22, Change: +2.16, Percent Change: +0.76