Lewis Hamilton was the fastest in both practice sessions at the Australian Grand Prix this morning.
But the Brit will find his car difficult to drive when the lights go out on Sunday, according to Horner.
“Mercedes looked quick in that second session, the times that both their drivers turned out looked pretty quick,” he told Sky Sports.
“On the long runs we look pretty sensible and I think the one lap pace of the Mercedes in that session looked pretty impressive.
“But their car looks stiff and difficult to drive so whether that’s sustainable for a Grand Prix I don’t know.”
Red Bull are hoping to launch a title bid of their own this season.
Following Daniel Ricciardo’s departure to Renault, Max Verstappen will lead the team and battle Hamilton and Sebastian Vettel at the front of the grid.
Ferrari have made significant improvements over the winter after falling way behind Mercedes last term.
But Horner reckons the Italian team will be the favourites to end their 12-year Championship drought.
“Ferrari look like they under-delivered to what we thought they had in testing and our guys both had pretty decent runs,” Horner added.
“I don’t know, we’ll find out tomorrow, but we can only look at ourselves.
“We for sure have some things to improve, but I think everyone has, it’s the first day, you start here. It’s been alright.
“The Mercedes looks very quick. We’ve got lots of work to do and for sure we’ll analyse a lot.
“I think in general the car felt alright, from the engine side, no problems.
“They just went very smoothly and things were good.”
Only Hamilton secured more points than Verstappen in the second half of last season.
And the 21-year-old could become the youngest ever F1 world champion if he wins the title this year.