Forest finished 19th last season and Davies insists a top-half finish in his first full campaign would represent terrific progress.
"If the league season finished tomorrow and we were in this position, I would be absolutely delighted. It would be a hugely successful season," said the Scot.
"I've said all along that if this group of players, which is still learning and still developing in my opinion, could finish in 10th or 12th spot, then that would be a remarkable achievement. It would be a vast improvement on last season and represent the kind of progression that I am looking for."
He added: "We are in a good position at the moment but we aren't getting ahead of ourselves here - we are staying realistic. We still have work to do with this squad and if we can finish anywhere near where we currently are now, I would be over the moon."