Ross Jack's side visit Ibrox for the second time this season aiming to gain revenge for their 5-1 Irn-Bru Third Division loss.
A place in the last 16 of the Scottish Cup is at stake and McCoist knows the Highlanders pose a significant goal threat.
He said: "They've been doing really well and I still think that Elgin are one of the better sides we have played this year even although the result at Ibrox would indicate otherwise.
"We won 5-1 but they took an early lead and played fairly well in that game.
"I've got a lot of time for their manager; Ross is a good lad and I also think his team scores goals.
"When you look at the team at the moment I think they've scored the same amount as ourselves (in the league) albeit they have played a game more.
"So it's a cup tie we're looking forward to and we would obviously settle for the same result as the league game.
"I'm not sure we'll get that but I think Ross' team have certainly in recent weeks shown that they are a handful for anyone in the division.
"And indeed with the way they are scoring goals they are playing with a lot of confidence."
The cup clash comes just days after the league meeting between the two was postponed at Borough Briggs.
McCoist added: "You look at the way the teams were positioned before the game and it gave us an opportunity, if we had won, to put a gap between ourselves and second and third place."
Rangers' prospects could receive a boost, with striker Francisco Sandaza closing in on a return from a fractured cheekbone sustained against Motherwell in September.
Sandaza was expected to be out until the end of the year after requiring facial reconstruction and the insertion of a plate. It had been feared at one stage he could lose an eye.
But the Spaniard scored in a successful return in a 3-1 reserve win over Livingston at Murray Park on Tuesday.
Reserve team boss Tommy Wilson said: "I would think with the goal threat he carries and his experience he'll absolutely be in contention to be in the squad for the Elgin game."