Rangers have made a solid start to the season, recovering from exiting the Champions League, and are at the top of the Scottish Premiership table.
The Glasgow giants will open their European campaign on Thursday night when they host Ligue 1 giants Lyon at Ibrox in their opening Europa League group game.
Ferguson firmly believes that Rangers are in for a tough night in their European opener as Lyon have some brilliant players in the squad.
He pointed out that Lyon have former Celtic stars Moussa Dembele and Jason Denayer and thinks that the French side are better than most sides in the Europa League.
The former midfielder feels Rangers are up against a Champions League level side in the shape of Lyon.
Ferguson said on the Go Radio Football Show: “I watched their game last night [Sunday], I was channel hopping and I came across them.
“They were playing Strasbourg and they won 3-1.
“To be fair, they do look a decent outfit and Rangers are going to be in for a tough night.
“Dembele got a goal, Denayer, who used to be at Celtic, also scored a goal last night and they have got another three or four dangerous players.
“For me, when people say the name Lyon they automatically say they are a Champions League team and that’s what I think of Lyon.
“It will be a tough game for Rangers but that’s what you want to come up against when you are in Europe.
“Lyon are certainly a very good team.”
Rangers made it to the last 16 of the Europa League last season where they lost to Sparta Prague.