Investec has downgraded its rating for banking group Barclays from 'buy' to 'add' but maintains that it is its preferred UK domestic lender.The target price for the stock has been lowered from 345p to 330p to reflect the impact of forthcoming dilution from the bank's so-called 'Leverage Plan'."There have been better times to take profits: ahead of a July 30th £6bn rights issue announcement for example. But for those investors who (like us) missed that opportunity, the stock is back within 1% of its July 29th close, and having been the sector's top performer over the past month, it may be time to lighten up," said analyst Ian Gordon.He said that the share dilution from the rights issue - which is being used to help plug a capital shortfall highlighted by the Prudential Regulation Authority (PRA) - pushes Barclays' target for return on equity (RoE) to exceed cost of equity (CoE) out to 2016.Nevertheless, Gordon still said that the bank has a "materially less risky (cost-led) path" to this RoE-over-CoE target than its domestic peers.He explained that while the capital-raise will be earnings dilutive, after June 2014 - the deadline for meeting the PRA's new capital rules - it becomes "surplus", and Barclays is already committed to "giving it back again in spades", subject to PRA approval."The pay-out will rise to 40-50% from 2014 - ie with the February 2015 dividend declaration 'resetting the dial'."BC