Max Verstappen has finished second to Lewis Hamilton at three of the first four races of the season, a string of results that have allowed the seven-time champion to open a 14-point advantage at the top of the standings.
Horner is, however, confident of Red Bull's ability to bounce back when F1 visits the Principality next week.
“Sector three [in Spain] is sometimes a good indicative view of how the car could be in Monaco," assessed Horner.
"Hopefully in Monaco, we should be competitive. At every grand prix this year, bar Bahrain, there has been less than a tenth of a second between ourselves and the pole position so it has been phenomenally close.
“At Monaco, we need to make sure we beat Mercedes but we know that this will be incredibly tough.”
After Verstappen pushed Hamilton all the way in the season-opener in Bahrain, he then recorded his only victory at Imola.
Horner has revealed he had expected to take some pain over the last two weekends in Portugal and Spain.
“We knew the last two circuits would play to their strengths," added Horner. "They’ve done that and we’re an awful lot closer than we have been.
“If we can find some more race pace, it’s still very, very tight between the two cars.”
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