The 19-year-old, who moved to the DW Stadium on loan on deadline day, scored the equaliser in last night's 1-1 draw with Rubin Kazan.
"After the season with us he will be good enough to go back and challenge [for a place at United]," Coyle told reporters. "He still has a lot to improve on and he will tell you that but he has ability. He is such a talented lad and I just want to get the best out of him.
"I'm giving him a platform and a wee bit of wisdom from my own playing days but he has to push himself on and you could see from his performance he is doing that. All I can do is try and impart any knowledge and experience I have as a player and a striker.
"As a manager I've worked with many international strikers and there is no doubt Nick Powell can go on to achieve that level. I believe he has everything in his locker, with progression and natural development, to attain that level. Aside from his goal he has pace to burn and is so elegant running the with ball."
The England Under-21 international signed for United from Crewe Alexandra last summer.