Roberto Mancini believes Everton could be playing in next season's Champions League.
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David Moyes' side visit the Etihad Stadium on Saturday sitting in sixth place but having only won one of their last eight games.
But the Merseysiders have an outstanding record against City, winning five of the last six meetings, and Mancini believes their record in big games makes them dangerous opponents.
"Everton started the season very well," he said. "They can finish in the Europa League but also they have the quality to finish fourth. Why not? They are a strong team, they have a strong mentality.
"Everton are difficult for everyone: for us, for Manchester United, for Chelsea because every game they play against a top squad they play very, very well. Every match we play against them we have a problem.
"I think that Saturday will be the same. For the top team to beat Everton it is difficult and you beat them only if you play a fantastic game. They always play [at] 100 percent."
City are in second place in the Premier League, six points ahead of third-placed West Bromwich Albion but Mancini denied it is a two-horse title race.
"I don't think so. I think Chelsea could be [in it]," he added, suggesting there are three title contenders now but referencing City's comeback to overhaul United last season
"We have another 24 games," he explained. "It is too long to say. Last year in [the last] six games we recovered eight points. Teams like Tottenham and Arsenal can recover these points in the next 25 games but it is difficult to say this now."
If City are to stay ahead of the chasing pack Mancini believes the goals of Mario Balotelli will be vitally important.
The striker opened the scoring in the 2-0 win against Wigan, and he has a role to play going forward.
"It's important for him [Balotelli] because he scored the first goal," Mancini said. "It's important because he scored an important goal in a difficult moment and now I hope he can continue because we need his goals."
Mancini praised teenage centre-back Matija Nastasic, who has helped City tighten up defensively.
The Premier League champions have kept three consecutive clean sheets in the league and only let in one goal in their last six games.
The Italian said: "In this moment, we are working better but this because all the team is working in the defensive phase.
"Nastasic needs more games but I think he has a fantastic quality. For the future of Man City I think that he will be an important player because he is young."