AutoZone ( AZO) reported a 25% rise in quarterly earnings Thursday, citing strong sales at its commercial business and effective cost-cutting initiatives. The Memphis, Tenn., automobile-parts retailer posted first-quarter net income of $105 million, or $1.04 a share, up from $84 million, or 76 cents a share, in the year-ago quarter. Wall Street analysts were expecting the company to earn 95 cents a share, according to research firm Thomson Financial/First Call. First-quarter same-store sales grew 4.5%. Total revenue for the quarter grew 4% to $1.219 billion from $1.176 billion last year, but fell short of the consensus estimate of $1.246 billion. During the quarter, AutoZone opened 31 new stores, closed one U.S. location and opened one new location in Mexico. The company now operates 3,098 stores in the U.S. and 30 stores in Mexico. In light of the company's revenue shortfall, the stock fell $6.61, or 8.3%, to $73.05 on the New York Stock Exchange . "Our continued focus on controlling costs through relentless expense discipline continues to drive shareholder value," said Steve Odland, the company's chairman, president and chief executive, in a prepared statement. "The strong, growing cash flow provided by our business, when combined with our high hurdle rates for new investments, should continue to drive improved return on invested capital and shareholder value," Odland said. Subsequently, Merrill Lynch raised its full-year earnings estimates and upped its price target for the stock to $120 from $105. Merrill expects the company to earn $5 a share in fiscal 2003, up from previous guidance of $4.80. For fiscal 2004, the firm is projecting earnings of $5.90 a share, up from $5.65. In addition, Merrill established a second-quarter earnings estimate of 74 cents a share. On average analysts are expecting a second-quarter net profit of 73 cents, according to Thomson.