Athletic gained widespread plaudits last season after reaching the finals of both the Europa League and Copa del Rey with their hugely entertaining brand of high-tempo attacking football.
However, this season has been a different story, with Athletic early casualties in both cup competitions and struggling at the wrong end of the Primera Division standings.
Nevertheless, Simeone is refusing to take Marcelo Bielsa's side lightly, pointing out they still boast most of the side that performed so well last season.
He said: "Looking beyond the league placings I see how they are playing and they are a dangerous team.
"I see the names they have who I'm sure will play, (Ander) Iturraspe, Ander Herrera, (Oscar) de Marcos, (Markel) Susaeta, (Iker) Muniain, (Aritz) Aduriz....who are all important players.
"It's a team who will give us a very difficult game, possibly the most complicated that we've had in recent times."
Atletico cut Barcelona's lead at the top of the Primera Division standings back to eight points with last weekend's 2-0 win over Levante, but they lost star striker Radamel Falcao to a hamstring injury in that match which has ruled him out of the trip to Bilbao.
Athletic coach Bielsa admits it is good news for his side that the Colombia international will be absent but has warned that Atletico are no one-man team.
He said: "Falcao is very important for any team who has him, but Atletico have already shown that have good alternatives to replace him."
While Falcao is definitely missing, it remains to be seen what role Athletic's own big-name striker Fernando Llorente will play in Sunday's clash after this week committing his future to Juventus.
Llorente agreed a four-year deal with the Serie A giants but will remain at Athletic until his contract runs out at the end of June before moving to Italy.
Bielsa does not expect this week's news to change anything with regards Llorente's commitment to the cause, with 27-year-old's desire to leave Athletic being made public last summer.
"It changes absolutely nothing," said Bielsa.
"We're happy for Llorente and sad for us because a member of the team is leaving, but we've known this since August.
"I don't think Llorente will give any less from now until the end of the season."
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