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International Business Machines Corp. (NYSE: IBM) recently provided a business update at its annual investor day. Big Blue talked about its progress on its strategic initiatives, including the cloud, Watson analytics and cognitive computing. IBM is well on its way to becoming a cognitive solutions and cloud company, and it stands to grow from here, according to one key independent research firm.

Argus was in attendance at the investor day, and the firm had a few key takeaways from the event. First the firm reiterated a Buy rating and raised its price target to $192 from $185, implying upside of 10% from Tuesday’s closing price of $173.88. Argus also pointed out that IBM has two ways to grow its cloud space because it is a cloud equipment infrastructure provider and a cloud host.

Strategic initiatives grew to 41% of revenue in 2016, but they have not been sufficient to swing Big Blue to positive revenue growth. Argus expects quarterly revenue to turn positive sometime in 2017, although the company’s declining hardware business could act as a possible obstacle to that goal.

CEO Ginny Rometty also commented at the event that IBM remains on path to becoming a cognitive solutions and cloud company. The path to this endpoint includes building a unique cloud and cognitive platform, using the platform to enable highly differentiated solutions and leveraging these resources for industry-specific challenges.

Argus detailed the investment thesis in its report:

Despite a market-beating performance in 2016, the IBM stock continues to trade at substantial discounts to its historical multiples. We believe that the multiyear relative underperformance of the stock and signs of continued acceleration in strategic businesses creates an attractive opportunity for patient investors. Based on the multiyear decline from peak prices above $215, we continue to regard IBM as a value play – but one that is transitioning to a growth story.

Keep in mind that in cloud services, IBM along with Microsoft and Google approximately equally divide about 20% to 25% market share in public cloud, behind 40% share for market leader Amazon Web Services (AWS). IBM is the leader in the key niche of hosted private cloud, signaling it has been able to transition over its legacy industry-leading clients in middleware, ITO and GBS.

So far IBM shares are up 6% in 2017, versus a 10% gain for the peer group of Argus-covered information processing companies. Its shares rose 21% in 2016, versus 2% for the peer group, and declined 14% in 2015, better than the 16% decline for the peer group.

Shares of Big Blue were last seen up 0.4% at $174.55 on Wednesday. The stock has a consensus analyst price target of $170.68 and a 52-week trading range of $142.50 to $182.79.