Forest were on course to win despite wasting a number of chances but were made to pay by an equaliser in the fifth minute of stoppage time as Reading earned a 1-1 draw in the Sky Bet Championship.
"You can see just what we need and I've been saying that for a few weeks," Davies said.
"The game should have been over, well and truly done. We were just not clinical up front and we should have had a second goal, a third and a fourth. We've got to kill teams off.
"Nine tenths of our game was good. We just didn't defend in the last 10 seconds and it felt like a defeat.
"We may have got seven points from nine but it should have been more. That was definitely two points dropped. Everyone agrees that."