After few years we have Arsenal in better shape with as they are working in transfer window for the strength of their team look like now they are having fair chance for the better result and their new recruited players can bring better results which will help them for having another challenging year in Premier League and in Champions League most chances they will be not had any problem for the having spot into knockout round because they are strong team which is capable of having better results against opponents.
With most chances their main target could be to have fight hard for the title in Premier League because in last season they lost this in last few rounds, but this time things are looking much better, and they can do good to challenge for the titleholder as well.
Rumor has it, Mikel Arteta confirmed Arsenal without Gabriel Jesus at the start of the season. Arteta revealed that G.Jesus would not play because he was having problems with his knee, quoted from the Football London page. thus, it seems likely that Arteta will be eyeing several strikers instead. it could be that their target is Vlahovic, or Kudus. for sure, Arteta will be looking for the ideal option. although in truth, they still have Nketiah and Trossard. thus, this squad will be much more competitive to compete in all competitions.
However, as you said their target is the Premier League trophy and will try to compete closely with Manchester City. but that does not mean, the Gunner's young squad will not fulfill their ambitions in this competition. with enough depth, I hope Arsenal can achieve the best results even if they don't win the Champions League trophy. because it's hard, if they will win a trophy in this competition.
To be honest, even though I am an Arsenal fan. but either way, I have to be realistic. in fact, there are many more established and more favored clubs. that's why, I find it difficult for Arsenal to be a strong competitor in the race for trophies. ideally, the Gunners should be able to qualify until the knockout like what you say. it will be even better, if they can perform optimally and surprise us.