Gloucester will host opponents whose last two Top 14 league games produced impressive victories over Clermont Auvergne and Grenoble, but the west country club are also on a roll following an outstanding 17-15 success against reigning Aviva Premiership champions Harlequins five days ago that strengthened their play-off hopes.
"Biarritz have hit some good form recently, and so have we," Gloucester rugby director Davies said. "It's a different challenge for us, having been battling away in the Premiership, but it is a home quarter-final and it doesn't get much better than this."
He added: "There is a real buzz about the club. We've worked very hard to get this home quarter-final against one of the premier teams in European rugby."
Gloucester secured last-eight status by winning a group that also included London Irish, Bordeaux-Begles and Mont de Marsan, and Davies added: "We had about as tough a group as you could ask for.
"We had to work hard just to qualify, let alone secure a home draw, and it's great to have a home tie against Biarritz, one of the best sides in Europe.
"Europe brings a different flavour to the season compared to anything else we play in. The competition in the Amlin Challenge Cup is phenomenal this season, and the quality of the teams in the quarter-finals speaks for itself."
Davies has made five changes from the side that accounted for Quins in a Kingsholm thriller, including an enforced switch at lock, where Will James replaces ankle injury victim Jim Hamilton.
Former England centre Mike Tindall returns to midfield duty alongside Henry Trinder - Billy Twelvetrees is on the bench - while Martyn Thomas replaces full-back Rob Cook and scrum-half Dave Lewis takes over from Dan Robson, with Nick Wood starting at loosehead prop.
The winners will be away to Wasps or Leinster - they meet at Adams Park on Friday night - later this month, with Perpignan or Toulouse hosting Bath or Stade Francais.